The latest report on consumer prices in the US as a whole was in line with market expectations. The cryptocurrency market reacted positively to the publication.
US consumer price growth in February made up 0.4% on a monthly basis and 6% on an annualized basis. Core indicator increased by 5.5% y/y and 0.5% mm. In the latter case, the data turned out to be 0.1% higher than the forecast, in others they were in line with them.
In January CPI increased by 0.5% m/m and 6.4% y/y, Core CPI — 0.4% m/m and 5.6% y/y.
The published data pointed to the stability of price growth for the service components in the index. They were mentioned, among other things, Fed Jerome Powell as an obstacle to a broad decline in inflation over the 2023 horizon.
The growth of the base rate by a five-month high of 0.5% m/m also leaves the possibility of raising the key rate by 0.25% following the March 22 meeting.
“The numbers confirm that the Fed’s drive to rein in price increases will not be easy. […] The challenge for the Fed now is how to prioritize inflation, which is still too high given the growing risks to financial stability from the collapse of the SVB.” – says the blog TOPLive Bloomberg.
Economists differed in their assessments of the Fed’s next steps – from a pause and an increase of 0.25% to a decrease by this step (Nomura).
Swaps and options markets favor the option of continuing to tighten policy at a slower pace. The probability of this scenario increased from 65% to 82.7%.
US government bonds reacted similarly. The stock and currency markets, on the contrary, interpreted the data not in favor of raising the key rate.
The total capitalization of digital assets shows a daily growth of 13.3%. Bitcoin surged 14.6% to test $26,000, Ethereum jumped 8.9% to $1,740, according to CoinGecko.
“It seems unlikely that the Fed will continue its aggressive rate hike regime,” — explained dynamics of Grayscale analytics.
Recall that the founder of Galaxy Digital Mike Novogratz admitted that by the end of March the price of bitcoin will return to $30,000.
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