The U.S. Bureau of Labor Statistics released the highly anticipated Consumer Price Index (CPI) inflation data for March, which indicated that a hotter-than-expected result after the inflation print came in at 3.5%. That compares to analyst expectations of 3.4% and the previous month’s inflation number of 3.2%.  The March inflation print held extreme importance for financial markets for assessing the trajectory of the Fed’s rate cuts.

After two consecutive disappointing inflation data in January and February, the bets on the first-rate cuts by the Fed had shifted from June to September. Today’s data further cements the idea that the Fed’s much-expected 2% inflation rate is still far from becoming a reality. The data also highlighted that the interest rates might remain higher for a little longer before the Fed finally starts embarking on the rate cut journey.

US Inflation Lands Hotter Than Expected

US CPI numbers showed that the Consumer Price Index for All Urban Consumers (CPI-U) climbed by 0.4 percent in March on a seasonally adjusted basis, which is the same increase as in February. Before seasonal adjustment, the all-items index grew by 3.5 percent over the previous 12 months.

At the same time as last month, yearly core CPI inflation continued to settle at 3.8%. The US is still experiencing a slow deflation process, despite the high rate of inflation, according to the March report.

Analysts on average had expected the core CPI print to be 0.3% month-on-month. Reuters reports that analysts also anticipated the statistics to indicate that headline inflation increased from 3.2% in February CPI to 3.4% year over year. The core number, which does not include volatile items like food and energy, was expected to decrease to 3.7% year over year from 3.8% in February.

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Fed Rate Cuts Might Take Longer

Ever since the beginning of the year, investors have been tried taking cues about the Fed’s rate cut trajectory. The December of 2023 saw market participants betting on three rate cuts this year. However, with data points indicating otherwise, the expectations have taken a toss with mixed signals indicating that the first-rate cut might take time.

At present the bets on a June and July rate cut have been tossed out. However, September still has investor hopes on it, with CME FedWatch Tool showing an over 45% chance of a September rate cut.

Bitcoin Price Breaks Key Support Level

As financial markets grappled with the disappointing inflation data, Bitcoin prices slipped below the key levels indicating the ripple effect of turbulence in the market. At the press time, BTC price stands at $67,721.59, being down nearly 4.3% as compared to the same time last day.

The US CPI data has also sparked worries about a further fall in Bitcoin prices. However, in such a situation, Bitcoin can be viewed by traders as an inflation hedge while the equities market is still unstable.

As previously reported by CoinGape, Markus Thielen forecasted that the price of ETH would drop below $3,100 owing to low trading volume, while the price of BTC would return to $62,000 due to halving-related volatility. The key levels for Ethereum at $3,460 and Bitcoin at $68,330 should be watched closely by traders for further indications.

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The post Breaking: Bitcoin Breaks Key Support As US CPI Comes in Hot At 3.5% appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am