In short
- The Consumer Price Index rose 4.2% in May from last year, its annual pace since 2023.
- Despite the jump, Bitcoin pared the losses, while the delay below the levels seen before the selloff on Friday.
- The reading is weighing on the Fed’s outlook, with traders penciling in only one rate hike this year.
Consumer prices rose at their fastest annual pace in three years, benchmark rates released on Wednesday showed, supporting expectations that the Federal Reserve will maintain its restrictive policy and put further pressure on crypto prices.
Consumer Price Index he left 4.2% in May from last year, the US Bureau of Labor Statistics said on Wednesday. The increase, which was in line with economists’ expectations, marked the third straight month in which annual inflation rose sharply.
On a monthly basis, the agency reported that inflation rose by 0.5%, a major increase driven by rising energy costs that matched economists’ forecasts. The report comes in the middle of the conflict between the US and Iran, a conflict that has squeezed oil around the world.
Although annual growth has slowed significantly since May 2023, Bitcoin It advanced following Wednesday’s snapshot, reaching about $61,750 from $61,000 in a 15-minute period. It later changed hands at $62,000, an increase of 0.3% on the previous day, according to CoinGecko.
Ethereum, XRP imagesand Solana it was up $1,650, $1.12, and $65, respectively. Although XRP remained 1.6% lower from the previous day, Ethereum and Solana reversed, recovering. to return from Friday’s selloff that coincided with strong employment figures.
The currency has been trying for years to return to the 2% target, but the war in the Middle East has disrupted the views of the US central bank and months of inconsistent progress.
The increase is the first under Fed Chair Kevin Warsh. Its leader, Jerome Powell, he protested constant pressure from President Trump to reduce borrowing costs. The central bank has kept its benchmark interest rate at a target rate of 3.5% to 3.75% in 2026.
Risky assets, including stocks and cryptocurrencies, often experience higher interest rates when interest rates rise and bond yields and US Treasuries look good. This means that non-yielding assets such as Bitcoin and gold are less attractive to investors.
“For Bitcoin, online publishing will not be effective,” Iggy Ioppe, chief financial officer of the trading platform Theo, said. Decrypt. “It makes things unpredictable and the economy is going to be more sold on their role than just speculation.”
Traders expect the Fed to be forced to raise interest rates once before the end of the year to protect against rising consumer prices, CME viewer. Before the geopolitical scare, traders penciled in three times earlier this year.
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