On Tuesday, June 13, the market reacted positively to the publication of inflation data.
Inflation in the United States increased by 0.1% in May. This inflation figure represents an increase of 4% over the past 12 months, which meets the Fed’s economic expectations. But will it be enough for the Federal Reserve to slow down its aggressive monetary policy?
According to Consumer Price Index Summary reports For May, published by the US Bureau of Labor Statistics, inflation in the US reached its lowest annual level in the last two years.
However, excluding volatile food and energy prices, underlying inflation remains high. This could hinder the Fed’s decision to reduce interest rates.
Will the Fed change its accommodative monetary policy amid rising US inflation rates?
On Tuesday, the market reacted positively to the publication of inflation data. However, the reaction has been as volatile as some analysts expected as many investors prefer to wait for the Fed’s announcements regarding interest rates, which will be published at its upcoming meeting this Wednesday.
In addition, it is important to consider the upward trend in various indicators, including housing prices, used vehicle prices, transportation services, and more. While these indicators experienced a relatively modest increase compared to April, their continued rise should not be overlooked by the Fed.
However, some analysts such as Jeffrey Roach, chief economist at LPL Financial, indicated that an “encouraging trend in consumer prices” could allow the Federal Reserve to keep rates unchanged, at least in the short term. He even said that if the healthy trend continues, it is possible that the Fed may hold off on raising rates for the rest of the year.
Volatility grips the cryptocurrency market
The report revealed divergence among the various components of the index, reflecting changes in commodity and service prices, which strongly influence overall economic conditions and the Federal Reserve’s policies.
For now, the cryptocurrency market is reacting with the same volatility it usually sees in response to the publication of this data. BTC rose almost 2% to a peak of $26,433 from $25,900. However, at the time of writing this note, the price has declined by 2.6% which has affected most of the altcoins which were experiencing a significant recovery.
ETH, which also saw an increase of 1.6%, experienced a decline of 2.58% from its high of $1,770 to its low of $1,724. even XRPwho had gained 10% for his victory against secondsfall ended with B T c,
Therefore, it is too early to declare victory in the crypto market. The real test will come tomorrow, when the Fed will announce whether it will stick with its accommodative policy or eventually cut yields, giving markets a chance to recover.
Marco is a passionate journalist with a deep addiction to cryptocurrencies and a keen interest in photography. He is fascinated by trading and market analysis. He has 5+ years of experience working with cryptocurrency projects.
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