#CryptoCPIWatch In summary:
The consumer price index inflation rate is expected to reach 2.9% year-over-year in February, down from 3.0% in January.
The core consumer price index inflation rate is expected to reach 3.2%, down slightly from 3.3% previously.
The Federal Reserve's expectations for interest rate cuts may change based on consumer price index data.
The volatility of cryptocurrency markets, stocks, and the U.S. dollar depends on inflation trends.
U.S. inflation data is expected to show a slowdown, but risks remain.
The U.S. Bureau of Labor Statistics (BLS) is scheduled to release its February consumer price index report on Wednesday at 12:30 PM GMT, which provides insights into inflation trends. Market analysts expect a slight decline in inflation, which could affect Federal Reserve policy, the U.S. dollar, and high-risk assets like cryptocurrencies. The core consumer inflation rate is expected to be 2.9% year-over-year, down from 3.0% in January, marking the first double drop in core and overall inflation since July 2024. The core consumer inflation rate, excluding food and energy, is expected to decrease to 3.2% from 3.3%.
Monthly inflation forecasts:
Core consumer price index: +0.3% month-over-month
Core consumer price index: +0.3% month-over-month
TD Securities analysts expect a broad-based slowdown in inflation, noting that housing costs and commodity prices may decrease, contributing to a dovish trend.
How might consumer price index data affect the Federal Reserve's interest rate decision?
The Federal Reserve has indicated caution regarding interest rate cuts, with its chairman Jerome Powell stating last week that economic conditions remain "steady," but inflation must cool further before considering monetary policy easing.
Markets have already priced in an 85 basis point rate cut in 2025, although persistent inflation may force the Federal Reserve to maintain a hawkish stance. On the other hand, a decline in the inflation rate may bolster expectations for rate cuts starting in June or July.
Impact scenarios:
Consumer price index lower than expected (below 2.9%) → may accelerate the Federal Reserve's rate cuts, weaken the U.S. dollar, and boost risk assets (cryptocurrencies and stocks).
Consumer price index higher than expected (above 3.0%) → keeps the Federal Reserve on a restrictive policy, the U.S. dollar rises, and stocks and cryptocurrencies decline.
Trump's trade policies exacerbate uncertainty regarding inflation.$BTC
