January inflation data came in higher than expected for the United States this month. The US central bank was shocked by this, which is why they now want to wait longer before lowering interest rates. That long wait could be disastrous for the bull market that Bitcoin currently seems to be embarking on.
Interest rate cut in May?
At the moment, the market is hoping for May as the month in which the US central bank cuts interest rates for the first time.
However, that seems anything but a certainty at the moment. Pat Harker of the US central bank said the following: “I am not going to completely rule out an interest rate cut in May. But that is not my expectation at the moment, although I would not say no in advance.”
For the time being, the future interest rate path of the American bank is shrouded in uncertainty. Due to the increased inflation, central bankers do not yet dare to pronounce on the exact moment for the first interest rate cut.
This was confirmed by Christoper Waller, another leading US central banker. “I want to see a few more months of inflation data to make sure that January data was an exception and that we are still on track,” Waller said.
It seems that we need a number of lower inflation scores before the US central bank dares to cut interest rates.
What does this mean for the Bitcoin price?
In theory, it is a bad development for the Bitcoin price that American inflation is higher than expected. In the ideal scenario, inflation falls back to the target of 2.0 percent and the US central bank quickly starts cutting interest rates.
The longer it takes for inflation to fall back to the desired 2.0 percent, the longer interest rates will remain at this elevated level.
The longer interest rates remain at this elevated level, the greater the chance of a recession in America. A recession could throw a spanner in the works of Bitcoin’s bull market.
In that respect, we have to hope that the upcoming inflation figures are a lot more favorable, so that Bitcoin can continue in calm waters.
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Source: https://newsbit.nl/inflatiedata-januari-mogelijk-funest-voor-bitcoin-bullmarkt/
