The latest inflation figures from the United States were published today. The figures paint a slightly optimistic picture and raise the question of whether the Federal Reserve (Fed) will cut interest rates soon. This could have a positive impact on volatile assets such as cryptocurrencies.
Inflation within expectations
Inflation in November rose slightly to 2.7% on an annual basis, a small increase compared to 2.6% in October. This increase is within economists’ expectations, fueling speculation that the Fed may cut rates at their December 17-18 meeting.
Core inflation, which excludes food and energy prices, stood at 3.3% compared to November last year. This remains a key focus for the Fed as their target is 2% annual inflation. The report offers policymakers valuable insights, but does not make their task any easier. The stronger-than-expected economic outlook makes it difficult to reduce inflation without damaging growth.
Positive and negative trends
Although inflation rose slightly, there were also positive developments. For example, energy prices have fallen by more than 3% on an annual basis, and petrol prices have even fallen by more than 8%. On the other hand, food prices rose faster, with the cost of eggs increasing by as much as 37.5% compared to last year.
The Fed’s conflict
The Fed faces a difficult choice: an interest rate cut can support economic growth, but the still stagnant inflation calls for caution. Any interest rate cut will likely have broad effects, including on the blockchain and crypto markets. These markets are highly dependent on changes in interest rates, making the Fed’s decision significant not only for traditional investors but also for crypto traders.
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Source: https://newsbit.nl/nieuwe-inflatiecijfers-gepubliceerd-wat-betekent-dit-voor-de-economie-en-crypto/
