Bitcoin and Ethereum Maintain Stability Amid 2.9% Inflation Deceleration
Bitcoin prices remained relatively stable on Wednesday following the release of a key inflation indicator that showed a milder-than-expected increase. The Consumer Price Index (CPI) climbed by 2.9% over the 12 months leading up to July, falling slightly below economists’ forecasts of a 3% rise in the index, which measures price fluctuations across various goods and services.
In terms of monthly changes, consumer prices inched up by 0.2% compared to June, reversing a decline seen in the previous month. Post the CPI report, Bitcoin traded around $61,200, registering a 3.9% gain over the past day. Similarly, Ethereum and Solana also saw increases of 3.9% and 3.8%, reaching $2,740 and $151, respectively.
The latest data suggests that inflation is aligning with the Federal Reserve’s 2% target, with expectations of the central bank easing monetary policy in the coming month after raising interest rates to their highest levels since 2007. Inflation has notably slowed from its peak of 9.1% in June 2022, with July’s reading marking the lowest level since March 2021.
Traders are anticipating a rate cut by the Fed in September, with discussions revolving around the magnitude of the cut. Market sentiment currently leans towards a 50% chance of a substantial 50 basis points rate reduction rather than a quarter-percentage-point cut, according to the CME FedWatch Tool.
Recent economic indicators, including the Purchasing Managers’ Index (PMI) data, have countered recession fears, indicating a more resilient U.S. economy than previously anticipated. As the Fed navigates the delicate balance between stable prices and maximum employment, the upcoming release of Personal Consumption Expenditures data on August 30 will provide further insights for policymakers.
While the global economy faced uncertainties earlier this month, positive U.S. service job data and market reactions to potential Fed rate cuts have helped stabilize sentiments. As the Fed weighs its policy decisions, the focus remains on avoiding premature inflation spikes while preventing a slide into recession due to prolonged high-interest rates.
