The Consumer Price Index (CPI) rose 0.2% in July, in line with economist forecasts for 0.2% and steady from 0.2% in June. Headline inflation was running above 9% at one point last year and has mostly steadily declined since, notwithstanding July’s bump to 3.2%. The core rate peaked at 6.5% in 2022. It’s dropped as well, though not as dramatically as the headline number. The price of Bitcoin (BTC) was little-changed in the minutes following the U.S. government’s report at $29,550.
The US Consumer Price Index (CPI) rose 0.2% in July, in line with economist forecasts, and the core CPI – which strips out volatile food and energy costs – was higher by 0.2%. Year-on-year core CPI in July was 4.7% versus 4.8% forecast and 4.8% in June. The US Federal Reserve began an historic run of monetary tightening to combat galloping inflation early in 2022, raising its benchmark fed funds rate target more than 500 basis points over the past 17 months. The surge in interest rates played at least a part in Bitcoin’s tumble from more than $69,000 in late 2021 to just above $16,000 at the end of 2022 and its so-far meek bounce this year to just above $29,000. Markets have been mostly expecting the U.S. central bank to sit on its hands at its next meeting in September and possibly for the rest of 2023.
The US Federal Reserve’s target rate for inflation is 2%, but members of the central bank have indicated multiple times that they do not need to see a 2% print before deciding to end the monetary tightening cycle. Prior to this morning’s numbers, the CME FedWatch tool showed traders had priced in just a 15.5% chance of a rate hike next month. In the immediate aftermath of the report, those odds have sunk to 10%.