Today, all eyes are on the US Core Consumer Price Index (CPI) as it’s set to make waves across financial markets. The outcome of this crucial data release could significantly influence whether the Federal Reserve will proceed with its anticipated rate cut—a move that could potentially spark a bullish trend in the cryptocurrency sector.
As cryptocurrency enthusiasts eagerly await the CPI results, the stakes couldn’t be higher. A favorable CPI report could trigger a much-needed boost in the crypto market. Here’s what to expect and how it might shape the future of digital assets.
US Inflation Expectations for August
Predictions for August’s CPI inflation are varied but closely watched. Major institutions have forecasted a CPI inflation rate between 2.5% and 2.6%. According to The Kobeissi Letter, institutions like Kalshi, TD Securities, UBS, Citigroup, Barclays, and JP Morgan anticipate a 2.5% figure. Meanwhile, Goldman Sachs, Wells Fargo, Deutsche Bank, Morgan Stanley, and Bank of America lean towards a 2.6% estimate.
Historically, the US Core Inflation Rate was approximately 2.4% in August 2019, dipping to a low of 1.2% by January 2020. The rate surged dramatically from 1.3% to about 6.5% between February 2021 and March 2022, peaking at 6.6% in September 2022. Since then, inflation has gradually decreased, starting this year at 3.9% and falling to 3.2% by July. Trading Economics predicts it will hold steady around 3.2% for August.
Inflation Rate Overview
The broader US Inflation Rate, which was 1.7% in August 2019, fell to 0.1% by May 2020. Following a sharp rise, it peaked at 9.1% in June 2022 before declining slowly. It was 3.1% at the beginning of this year and decreased to 2.9% by June. Predictions suggest it may drop further to 2.7% this month, with some institutions, as noted by The Kobeissi Letter, forecasting a decline to 2.6% or even 2.5%.
Will the Federal Reserve Cut Rates?
The pivotal question is whether the Federal Reserve will follow through with its planned rate cut. Insights from Wise Advice indicate that if the CPI is below 2.6%, a rate cut is highly probable. Conversely, if the CPI exceeds this threshold, the likelihood of a rate cut diminishes.
Also Read: Consumer Price Index (CPI): A Guide to Inflation and Your Wallet
A Federal Reserve rate cut could potentially signal a new era for the cryptocurrency market. Such a move might provide the catalyst needed to energize the sector, which has been awaiting a bullish shift. If the CPI figures align favorably and prompt a rate cut, the crypto world could see a surge in market sentiment, driving up prices and reviving investor confidence.
As the data release approaches, all eyes are on the CPI report. The implications for both traditional financial markets and the burgeoning cryptocurrency sector are profound. Stay tuned—today’s CPI outcome could be a game-changer for the future of digital assets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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