Keys to take
- Today, the U.S. annual inflation rate stood at 8.3%, slightly above economists’ expectations, but 20 basis points below the March numbers.
- The prevailing sentiment among economists is that inflation rates could peak in April, meaning the Fed would potentially not have to do anything unexpected in terms of tightening in the coming months.
- The crypto market is falling despite the news, and the whole market is falling about 13.5% a day.
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According to data released today by the U.S. Bureau of Labor Statistics, the April year-on-year consumer price index fell to 8.3%, 20 basis points below the 41-year-high inflation rate the economy saw in March.
April CPI prints at 8.3%
April CPI data indicate that US inflation may have already peaked.
According to the latest from the U.S. Bureau of Labor Statistics inflation data, the consumer price index rose 0.3% in April, bringing the annualized inflation rate in the US to 8.3%, or 20 basis points below the March CPI. Shelter, food and aircraft fair indexes saw the largest price increases, while the energy index fell 6.1% during the month, after an 11% increase in March.
Today’s Bureau figures fell largely in line with the expectations of economists, who estimated that consumer prices will rise 0.2% in the month and 8.1% over the year. Although inflation rates continue to hang at four-decade highs, the April data looks like a significant improvement over what the economy has been seeing so far. By comparison, the March CPI index showed that inflation rose 1.2% in the month and reached a 41-year high of 8.5%.
The poorly formed consensus among economists was that inflation was likely to peak in April and begin to decline slowly in the coming months. Market participants consider this scenario relatively bullish because it could mean that the Fed will have to do less tightening to lower the CPI to 2%. If high consumer prices can take over inflation (which does not measure height but the rate at which consumer prices rise) alone, there is less chance that the Fed, which is already embarking in an aggressive monetary policy, it will have to raise interest rates beyond 50 basis points at a time or increase the rate of its quantitative easing or balance sheet development program. This could mean that credit remains relatively cheap, which facilitates the refinancing of domestic and corporate debt and leaves more discretionary income for investors within the economy.
However, the cryptocurrency market did not react well to news of falling inflation rates. The two largest cryptocurrencies, Bitcoin and Ethereum, are trading 8.8% and 10.8% lower on the day, with no slight recovery in the news. The cryptographic market as a whole fell by 13.5%, a move initiated mainly by the disastrous disarticulation of the Earth ecosystem. The LUNA blockchain native government token and its UST flagship lost about $ 43 billion in value over the past week in a so-called “death spiral” event that saw the stable UST currency move away from its desired $ 1 target. which led to LUNA’s “support.” down with him.
Disclosure: At the time of writing, the author of this piece had ETH and several other cryptocurrencies.