US CPI Report: Is Inflation Declining or Are There Ongoing Pressures? What It Means for the Market and Crypto
AI Summary
Key Points:
February CPI inflation is expected to be 2.9% year-on-year, down from 3.0% in January.
Core CPI is expected to be 3.2%, slightly down from 3.3% previously.
The prospects for a decrease in the US Federal Reserve's interest rates may change based on CPI data.
Crypto, stock markets, and fluctuations in the US dollar depend on inflation trends.
US Inflation Data Expected to Decline, But Risks Remain
The US Bureau of Labor Statistics (BLS) will release the Consumer Price Index (CPI) report for February on Wednesday at 12:30 GMT, providing important insights into inflation trends. Market analysts anticipate a slight decline in inflation, which could impact Federal Reserve policy, the US dollar, and risk assets such as cryptocurrencies.
The core CPI inflation rate is expected to reach 2.9% year-on-year (YoY), down from 3.0% in January, marking the first dual decline in both core and overall inflation since July 2024. The core CPI inflation rate, which excludes food and energy, is projected to decrease to 3.2% from 3.3%.
Monthly inflation projections:
Core CPI: +0.3% MoM
Core CPI: +0.3% MoM
Analysts at TD Securities expect a broad slowdown in inflation, noting that housing costs and commodity prices may decline, contributing to the easing trend.
How CPI Data Could Influence Federal Reserve Interest Rate Decisions
The Federal Reserve has signaled caution against rate cuts, with Chair Jerome Powell stating last week that economic conditions remain "solid" but inflation needs to further subside before monetary easing is considered.
Markets have priced in a rate cut of 85 basis points (bps) in 2025, but persistent inflation may force the Fed to maintain an aggressive stance. Conversely, lower inflation could reinforce expectations for rate cuts starting in June or July.
Impact scenario: