Even though headline inflation was faster than expected in December, investors are currently in buying mode after an unexpected one-year cut in the key rate.
The closely watched Consumer Price Index (CPI) rose 0.4% in December, slightly above analyst consensus and the previous month’s 0.3%. On an annual basis, the CPI rose 2.9%, compared to analysts’ forecasts of 2.9% and the previous month’s forecast of 2.7%.
The core CPI, which excludes food and energy costs, rose 0.2% in December, compared with 0.2% expected and 0.3% the previous month. The year-over-year core CPI, however, fell to 3.2%, compared to 3.3% forecast and 3.3% in November.
The pace of core inflation is of considerable importance to policymakers, who have expressed at least mild frustration that it has remained above 3%, while headline inflation has fallen at a pace much faster.
The price of Bitcoin (BTC) rose about $1,500 in the minutes following the report to hit $98,500 after the report, up 2% in the past 24 hours, according to CoinDesk data .
In traditional markets, U.S. stock index futures rose about 0.5% after the data was released, while bond yields and the dollar fell sharply.
Crypto markets moved within varying limits through January, driven by macroeconomic data and monetary policy expectations amid a strong economy and fears of persistent inflation. Bitcoin has largely consolidated below $100,000 since Federal Reserve Chairman Jerome Powell’s hawkish comments in December. This, combined with a string of better-than-expected economic and inflation data, has led market participants to erase almost all expectations of a rate cut this year.
Most recently, Tuesday’s Producer Price Index (PPI) showed cooler-than-expected inflation numbers, supporting BTC’s rebound to $97,000 after the sharp sell-off below $90,000 earlier in the week.
