CPI Rises 6.5%, Bitcoin and Other Cryptocurrencies React Positively to the News

Consumer price index (cpi) report released thursday showed that the annual rate of inflation fell to 5.7% in december, down from 7.1% in november. the monthly rate of inflation decreased by 0.1%, while the core cpi, a measure of inflation excluding volatile food and energy prices, ticked up slightly by 0.3%. the report was met with a favorable reaction in both the cryptocurrency and traditional markets, with bitcoin and ethereum rising 5% and major stock indexes reacting positively.
when the report was released, the federal reserve had already raised its benchmark interest rate seven times in an effort to bring soaring prices under control. after four consecutive meetings of raising rates by 75 basis points, the central bank showed signs of letting off the gas in december with a rate hike of 50 basis points. analysts are now more confident in the fed’s softer approach after the release of the cpi report, with the chance of the fed raising rates by a quarter of a percentage point compared to half a percentage point increasing slightly to 77%.
the decrease in the inflation rate was partly attributed to a month-to-month decline in the price of gasoline and fuel oil, which fell 9.4% and 16.6%, respectively. federal reserve chairman jerome powell has emphasized the importance of rate hikes in order to maintain the long term health of the economy, stating that “price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time”. bitcoin’s movements appear to be in lockstep with traditional financial indicators and stock markets, further demonstrating the increasing similarities between the two.


By Evey Lovelace

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