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Ahmed Barakat
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CryptoNews Editorial Team
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June PPI came in at -0.3% month-on-month against the consensus of 0.0%, and 5.5% year-on-year against 6.2%. The previous surprise followed a higher-than-expected CPI, prompting investors to revise their expectations for the Federal Reserve’s rate-cutting policy.
The full June PPI breakdown from XTB shows PPI Core MoM at +0.2% versus +0.3% expected, and PPI Core YoY at 4.7% versus 5.1% expected. Any measure published under contract.
Tuesday’s CPI data also surprised with a decline, with inflation falling 0.4% on a monthly basis against expectations of a 0.1% decline, cooling to 3.5% year-on-year from 4.2% in May. Core CPI was flat on the month and rose 2.6% on the year.
May’s story is relevant here. PPI reached 6.0% year-on-year in May, fueling concerns that inflation is deepening. June’s rate cut to 5.5% eased those concerns and prompted investors to reconsider how long the Federal Reserve’s policy should remain.
According to Cryptonews analysis, the markets are now expected to lean towards the Fed’s very low interest rates, although the central bank remains cautious to reduce interest rates before the correction. The warning was heavy on risk factors, including crypto markets, and weaker inflation data could help offset some of that.
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Expectations of Price Cuts, Dollar Breaks, Bitcoin Profits
The dollar weakened slightly following the PPI release, in line with how lower rates eased the case for the hawkish Federal Reserve. A weaker dollar can also lower the opportunity cost of defaulting assets, which has helped Bitcoin and other risky assets.
The latest CPI and PPI reports show inflationary pressure eased in June after strong readings in May. While the data shows rising rates, it does not guarantee that inflation is on a steady path back to the Fed’s 2% target.
What is not guaranteed is a Fed rate cut in the near future. The Federal Reserve has repeatedly said it needs concrete evidence that inflation is moving toward its target before easing policy. A month of low inflation may boost expectations of future rate cuts, but more will determine whether June is the start of a long-term slowdown or a temporary slowdown.
For Bitcoin, stability over the medium-term has improved as a reduction in inflation has reduced interest rates. Whether this translates into a sustained rally will depend on upcoming inflation reports, Federal Reserve guidance, and broader market sentiment. Technical analysts who own BTC are now looking at whether the stock can build on a macro-driven trend rather than disappearing as the next economic phase approaches.
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