Key Points

* February CPI expected at 2.9% YoY, down slightly from 3.0% in January

* Core CPI forecasted to ease to 3.2% from 3.3%

* CPI results could reshape Fed rate-cut expectations

* Inflation trajectory will influence the US dollar, stock market, and crypto assets

Cooling Signs in US Inflation, But Uncertainty Lingers

The Bureau of Labor Statistics will release the February Consumer Price Index (CPI) report on Wednesday at 12:30 GMT, offering critical insight into inflation dynamics. Markets anticipate a slight cooling in both headline and core inflation — a development that could influence the Federal Reserve's interest rate outlook and broader asset markets.

Headline CPI YoY: Expected at 2.9% (vs. 3.0% in January)

Core CPI YoY: Projected at 3.2% (down from 3.3%)

Monthly estimates: +0.3% for both headline and core CPI

TD Securities analysts expect a broad easing trend, citing potential declines in housing and goods prices.

Fed Rate Cut Outlook Hinges on Inflation Data

The Federal Reserve remains cautious on rate cuts. Chair Jerome Powell noted that while the economy is "solid," more progress on inflation is needed before easing policy. Markets currently price in 85 basis points of cuts for 2025 — but the trajectory depends on how inflation evolves.

Potential outcomes:

CPI below 2.9%: Strengthens case for mid-year rate cuts, weakens USD, and lifts stocks and crypto

CPI above 3.0%: Delays cuts, strengthens USD, pressures risk assets

Trump’s Trade Agenda Could Reignite Inflation

Adding to the uncertainty is former President Donald Trump's revived trade agenda. Recent tariffs on China, Canada, and Mexico risk pushing up import prices and disrupting supply chains. While the Fed has historically viewed tariffs as temporary inflation drivers, an escalation could keep inflation stubbornly high — limiting its ability to cut rates.

Crypto Investors Brace for CPI Shock

Crypto markets are on edge ahead of the CPI release, with major tokens trading under pressure:

Bitcoin (BTC): $82,185 (+0.57%), down 25% from peak

Ethereum (ETH): \$1,889 (-1.75%)

XRP: +1.6%

Dogecoin: +2.5%

Solana, Cardano: Slight losses

Investor sentiment remains cautious. CoinShares reported \$876 million in outflows from digital asset funds — the fourth straight week of withdrawals.

Inflation impact on crypto:

Lower CPI: Bullish — increases likelihood of rate cuts, supports risk assets

Higher CPI: Bearish — Fed stays hawkish, USD strengthens, crypto under pressure

What’s Next? Expect Volatility Across Markets

This CPI release is a key event for shaping the Fed’s next move and will likely spark volatility in equities, the dollar, and crypto markets. While inflation appears to be cooling, risks from trade policy, supply chains, and persistent price pressures remain. Investors should prepare for sharp moves — especially in crypto, where sensitivity to macro data is high.

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