Inflation in the U.S. has gradually been on a decline. The CPI fell to 7.1% in November last year, a number lower than expected. Likewise, it further dropped down to 6.5% in December and 6.4% in January this year. Now, the U.S. Bureau of Labor Statistics has released the much-awaited numbers for February. According to data, inflation dropped to 6%. The figure is exactly in line with the projected median estimate of 6%.
Will regulators cut some slack?
Today’s inflation numbers follow the ripe unemployment rise data that was released last week. Despite adding a slew of jobs in the month of February, the U.S. unemployment rate increased to 3.6%. Nevertheless, the Bureau of Labor Statistics employment summary of the month showed that 311,000 jobs were added last month, massively exceeding expectations by more than 200,000. The latest inflation data release, along with the employment-unemployment data, will play a critical role in helping regulators determine interest rate hike numbers going forward.
Owing to the ongoing banking sector stress, several renowned names do not see a reason for the Federal Reserve to deliver an interest rate hike at its meeting next week. While Goldman Sachs expects no hike for now, a recent Reuters’ report brought to light that traders’ bets are equally split between a 25 BPS rate hike and a no-hike scenario.
With the Fed attempting to lower inflation rates, Chair Jerome Powell previously warned citizens that interest rates could rise higher than previously expected. In fact, he has time and again pointed out that inflation progress is “likely to be bumpy.” However, regulators stepping up and bailing out customers from the banking catastrophe has given citizens a fresh reason to expect some leniency over the short term.
Also Read: Goldman Sachs “No Longer Expects” Fed to Raise Interests in March
Bitcoin’s price has been quite receptive to macroeconomic conditions. Of late, however, the largest cryptocurrency asset has been acting like a true hedge. Despite the banking crisis, this asset broke past $24k a day back. Now, right after the release of the latest inflation data, Bitcoin has breezed past the $25,000 mark as illustrated in the chart below.
Source: Bitcoin/USDT by TradingView
As analyzed in an article earlier today, the current environment calls for a potential pull-back before Bitcoin starts rising again. For now, institutions have been mass-selling, while whales have been missing in action. Alongside, other market participants have gradually started booking profits, paving way for a correction.
Analyst Michaël van de Poppe recently took to Twitter to share his post-CPI Bitcoin game plan. Revealing the same, he said,
“You’d preferably want to see some period of consolidation (CPI day today) before continuation. If markets sweep range high at $25.2K, make a bear. div and fall back, I’d be looking for shorts to $23K.“
Also Read: U.S. Unemployment Rate Increases to 3.6%