Worldsfeed Tech Desk: On Wednesday, cryptocurrency prices showed little movement despite the release of higher-than-expected inflation figures in the United States for August. The Bureau of Labour Statistics (BLS) reported that the Consumer Price Index (CPI) increased by 3.7% year-on-year, slightly surpassing economists’ predictions of 3.6%. The uptick in August’s CPI, driven primarily by rising gasoline prices, resulted in a 0.6% month-on-month increase in the index.
Following the publication of the CPI report, Bitcoin (BTC) traded at approximately $26,270, reflecting a 1.6% increase over the previous day. Ethereum (ETH) also saw a modest rise of 1.9%, reaching around $1,620.
The Federal Reserve, which is set to make its next interest rate announcement on September 20, will closely assess the CPI report alongside other economic indicators like the US labor market and recent Personal Consumption Index (PCI) data. The Fed has adopted a firm stance on monetary policy due to the spike in inflation to 9.1% in June, the highest annual increase since 1981. Higher interest rates are intended to cool the economy by increasing the cost of borrowing.
Higher interest rates not only affect traditional assets but also impact cryptocurrencies and other risk assets like stocks. As US Treasuries become more attractive to investors, cryptocurrencies face downward pressure. Despite a significant decline since June, inflation remains above the Fed’s target of 2% per year.
In July, the Fed raised its benchmark interest rate to a range of 5.25% to 5.5%, marking a 22-year high. This decision followed a skipped rate hike in June, the first time the Fed had refrained from raising rates in 18 months.
Currently, traders are anticipating a 91% likelihood that the Fed will maintain its rates at the upcoming meeting, with only a 5% chance of a rate cut in January of the following year, according to the CME Group’s FedWatch Tool.
0 Comments