While headline inflation came in faster than expected in December, investors are currently in buying mode after an unexpected year-over-year drop in the core rate.
The closely watched Consumer Price Index (CPI) rose 0.4% in December, slightly above analyst consensus and 0.3% the previous month. Year over year, the CPI rose 2.9%, compared to analyst forecasts of 2.9% and the previous month’s reading of 2.7%.
The core CPI, which excludes food and energy costs, rose 0.2% in December, compared to expectations of 0.2% and the previous month’s figure of 0.3%. However, the year-over-year core CPI fell to 3.2% versus forecasts of 3.3% and the November rate of 3.3%.
The pace of core inflation is of considerable importance to policymakers, who have expressed at least some frustration at its stickiness above 3% as headline inflation fell at a much faster pace.
The price of bitcoin (BTC) rose around $1,500 in the minutes following the report to $98,500 after the report, a 2% increase in the past 24 hours, CoinDesk data shows.
In traditional markets, US stock index futures added about 0.5% after the data, while bond yields and the dollar fell sharply.
Crypto markets have range-traded throughout January based on the whims of macroeconomic data and monetary policy expectations amid a strong economy and concerns of sticky inflation. Bitcoin has mostly consolidated below $100,000 since Federal Reserve Chairman Jerome Powell’s hawkish comments in December. That, along with a series of better-than-expected economic and inflation data, led market participants to all but erase all expectations of rate cuts this year.
More recently, Tuesday’s Producer Price Index (PPI) for December showed colder-than-expected inflation readings, supporting BTC’s rally to $97,000 following the abrupt sell-off below $90,000 earlier in the week.
