Markets reacted positively to the release of inflation data on Tuesday, June 13th.
US inflation rose 0.1% in May. This inflation figure represents a 4% rise in the last 12 months, meeting the Fed’s economic expectations. But is it enough for the Fed to slow down its aggressive monetary policy?
According to the consumer price index overview report Inflation in the United States reached its lowest level in a year in two years, according to a May report released by the U.S. Bureau of Labor Statistics.
But underlying inflation remains high, barring volatile food and energy prices. This could hinder the Fed’s decision to cut rates.
Will the Fed change its aggressive monetary policy amid soaring US inflation?
Markets reacted positively to the release of inflation data on Tuesday. But the reaction has been volatile, as some analysts expected, as many investors are eager to wait for the Fed’s announcement on interest rates to be announced at its next meeting on Wednesday.
In addition, it is important to consider upward trends in various indicators such as housing prices, used car prices, and transportation services. Although these indicators rose relatively modestly compared to April, the Fed should not overlook continued growth.
But some analysts, such as LPL Financial’s chief economist Jeffrey Roach, have suggested the Fed may keep rates on hold, at least in the short term, due to a “positive trend in consumer prices.” bottom. He even said the Fed could stop raising rates later this year if the healthy trend continues.
Volatility rules the cryptocurrency market
The report uncovered divergences between the various components of the index, which reflect changes in commodity and service prices that impact overall economic conditions and Federal Reserve policy.
For now, the cryptocurrency market is reacting with the same volatility that it normally exhibits in response to the release of this data. BTC rose almost 2% from $25,900 to a peak of $26,433. However, at the time of this writing, the price fell 2.6%, affecting the majority of altcoins that were experiencing a significant recovery.
ETH is also up 1.6%, but has fallen 2.58% from a high of $1,770 to a low of $1,724. XRP, which achieved a 10% gain in its victory over the SEC, also ended up falling like BTC.
XRP price drops 10%. Photo: TradingView
Therefore, it is too early to declare victory in the cryptocurrency market. The real test will come tomorrow when the Fed announces whether it will continue with aggressive policy or finally ease, allowing the market to recover.
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Marco is a passionate journalist with a deep addiction to cryptocurrencies and a keen interest in photography. He is interested in trading and market analysis. He has more than his 5 years of experience in cryptocurrency projects.
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