US CPI Report: Inflation Cooling or Persistent Pressure? What It Means for Markets and Crypto
Key Points:
February Headline CPI: Expected at 2.9% YoY, down from 3.0% in January
Core CPI: Forecasted at 3.2% YoY, slightly lower than 3.3% prior
Monthly Growth: Both headline and core CPI projected at +0.3% MoM
Market Impact: Fed rate decisions, USD strength, stocks, and crypto remain sensitive to inflation trajectory
Cooling Inflation—But Risks Persist
The Bureau of Labor Statistics will release the February CPI report Wednesday at 12:30 GMT. Analysts expect signs of cooling inflation, with both headline and core CPI slipping slightly. This would mark the first simultaneous monthly dip in both metrics since July 2024.
TD Securities points to slowing housing and goods prices as key contributors to the expected disinflation trend.
What It Means for the Fed
Fed Chair Jerome Powell has emphasized that rate cuts will depend on further inflation moderation. Markets have priced in 85 basis points of rate cuts in 2025, but persistent inflation could delay cuts.
Scenarios to Watch:
CPI < 2.9% → Accelerated rate cuts, USD weakens, stocks/crypto rally
CPI > 3.0% → Hawkish Fed stance, USD strengthens, stocks/crypto dip
Trump's Trade Policies Cloud the Outlook
Former President Trump’s revived tariffs on China, Canada, and Mexico introduce new inflation risks. Although the Fed traditionally views tariffs as transitory, sustained trade tensions could drive up prices and restrict policy flexibility.
Crypto Braces for CPI Volatility
Crypto markets are in a holding pattern ahead of the data. Bitcoin trades near $82,185 (-25% from peak), while Ethereum sits at $1,889 (-16.2% weekly).
Current Crypto Sentiment:
BTC: +0.57%
ETH: -1.75%
XRP: +1.6%
Dogecoin: +2.5%
Solana, Cardano: Slight declines
CoinShares reports $876M in outflows, the fourth straight week of digital asset fund losses, reflecting broader risk aversion.
Bottom Line
The CPI report is pivotal for the Fed’s rate path and market sentiment. Even as inflation shows signs of easing, geopolitical risks, Trump’s tariff agenda, and supply chain concerns could keep volatility high—especially in crypto and other risk assets.
