According to economists’ predictions and in accordance with the monthly growth in June, the Consumer Price Index increased by 0.2% from June to July. In comparison to expectations of 3.3% and the data from June, the CPI increased by 3.2% on an annual basis.
The core CPI, which excludes volatile food and energy prices, up 0.2% in July as well, in line with expectations and June’s increase. In contrast to the forecast of 4.8% and the 4.8% in June, the core CPI increased by 4.7% from a year earlier in July.
Following the U.S. government’s report that bitcoin (BTC) was worth $29,550, the price of the cryptocurrency saw minimal change.
The numbers might have made it less likely that the Federal Reserve will decide against raising interest rates at its upcoming meeting in September. The CME FedWatch tool revealed that traders had only factored in a 15.5% possibility of a rate hike next month before to Thursday’s CPI release. Immediately following the report, those chances dropped to 10%.
To confront soaring inflation, the Fed has been tightening monetary policy since early last year. Over the past 17 months, it has increased its target for the benchmark fed-funds rate by more than 500 basis points, bringing it to the current range of 5.25% to 5.50%.
The increase in interest rates was at least partially responsible for bitcoin’s decline from over $69,000 in late 2021 to just over $16,000 at the end of 2022. The rise in bitcoin’s value has probably been restrained by ongoing rate concerns this year. The most recent CPI report could be beneficial for bitcoin to the degree that it validates anticipation that the Fed may scale back rate rises.
Annual inflation as determined by the CPI peaked at 9.1% in June 2022 and has since largely consistently decreased. Although not as sharply as the headline rate, the core rate also reached a high of 6.5% in March 2022 and has since decreased. The Fed’s goal rate for inflation is 2%, but Fed officials have repeatedly stated that they are not waiting for that number to be reached before ending the cycle of monetary tightening.