The February inflation figures in the United States have arrived, and there is good news for crypto investors. Inflation continues to fall, which increases the chance that the Federal Reserve (FED) will lower interest rates later this year – exactly what financial markets would like to see.
Inflation lower than expected: positive for crypto
The latest data shows that inflation in February amounted to 2.8%, lower than the expected 2.9% and the 3% of January. However, not all prices fell. For example, the price of eggs rose by 10% in February and no less than 59% on an annual basis, while airline tickets and new cars became cheaper.
The unexpected decrease in inflation indicates that the price pressure in the economy is decreasing further. This increases the chance that the FED will implement an interest rate reduction later this year. This is positive news for crypto investors, because lower interest rates often means more liquidity in the market. This can further support risky assets such as shares and cryptocurrencies.
Markt responds positively
Immediately after the publication of the inflation figures, both traditional and cryptom markets responded positively.
- S&P 500 rose by 0.60% at the time of writing.
- Bitcoin (BTC) recorded an increase of 1.3% immediately after the announcement.
Fed remains careful
Yet an interest reduction is not yet certainty. FED chairman Jay Powell has indicated that the central bank wants to proceed carefully and will first thoroughly analyze all economic data.
In other words: investors must be patient. But if inflation continues the falling trend, the chance that the Fed will still implement an interest rate reduction later this year.
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Source: https://newsbit.nl/amerikaanse-inflatie-daalt-sterker-dan-verwacht-goed-nieuws-voor-crypto/
