The American inflation figures remain an exciting moment for the financial markets-and certainly also for crypto investors.
Today, the US Department of Trade announced that the so-called Personal Consumption Expenditures (PCE) index has risen by 0.4% on a monthly basis. That brings annual inflation to 2.8%, slightly higher than the expected 2.7%. And that immediately raises the most important question: what does this mean for crypto?
Inflation increases, but consumers continue to spend
The PCE index filters volatile components such as food and energy prices away and is therefore seen as a purer standard for price pressure in the economy. This figure is particularly relevant for investors, because it is the most important indicator on which the Federal Reserve bases its policy – including any interest rate letings.
It is striking that, despite the higher inflation, consumers continue to spend. The consumer spending increased by 0.4% in February, slightly below expectations but still sturdy.
More importantly: the incomes rose by no less than 0.8%, twice as many as analysts had predicted. That means that people not only continue to consume, but also have more to spend more.
Interest reduction from sight – and that touches crypto
These figures are not good news for the Cryptomarkt. Higher inflation considerably reduces the chance of an interest rate reduction in the short term. As long as inflation remains above the goal of 2%, the Federal Reserve will be reluctant to relax the policy. According to economists, reduces interest while inflation is stubbornly high, the economy could actually overheat.
The FED first wants to see convincing signals that inflation actually falls structurally before it lowers interest rates – and that means that the interest climate remains unfavorable for risky assets such as Crypto for the time being.
Trade tensions can lead to additional risk
As if it is not yet complex enough, there is also an additional inflation pressure from the international playing field. Former President Donald Trump again argues for high input rates, something that, according to economists, can further stir up inflation. If this leads to countermeasures from other countries, a new trade war lurks around the corner.
That would cause even more uncertainty in the financial markets-including the cryptomarket, which often responds strongly to geopolitical tensions and macro-economic uncertainty.
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Source: https://newsbit.nl/amerikaanse-inflatie-hoger-dan-verwacht-wat-betekent-dit-voor-crypto/
