Today, the latest inflation data from the United States was released. The numbers paint a slightly optimistic picture and raise the question of whether the Federal Reserve (Fed) will cut interest rates soon. This could have a positive impact on volatile assets such as cryptocurrencies.
Inflation within expectations
Inflation rose slightly year-on-year to 2.7% in November, up slightly from 2.6% in October. This increase is in line with economists’ expectations and fuels speculation that the Fed may decide to cut interest rates at its December 17-18 meeting.
Core inflation, which excludes food and energy prices, was 3.3%, compared with November of last year. This remains a key focus for the Fed, which aims for 2% annual inflation. The report provides valuable insight for policymakers, but it does not make their job any easier. The stronger-than-expected economic outlook makes it harder to continue to reduce inflation without hurting economic growth.
Positive and negative trends
Although inflation has increased slightly, there are also positive developments. Energy prices have fallen by more than 3% year-on-year, while gasoline prices have actually fallen by more than 8%. On the other hand, food prices have increased faster, with the cost of eggs increasing by a remarkable 37.5% year-on-year.
The Fed’s Dilemma
The Fed is facing a difficult decision: a rate cut could boost economic growth, but still stagnant inflation requires caution. A possible rate cut is expected to have far-reaching effects, including on the blockchain and crypto market. These markets are highly dependent on changes in interest rates, which is why the Fed’s decision is of great importance not only for traditional investors but also for crypto traders.
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