The U.S. Consumer Price Index (CPI) experienced both headline and core inflation rates slightly below expectations in May, as reported by the Bureau of Labor Statistics (BLS). The CPI rose 0.2% at year-over-year rates, the most since February of 2021, marking a decline from the 0.2% target BLS had forecasted. On a year-over-year basis, the CPI moved up 2.4%, surpassing the 2.5% forecast and the 2.3% rate of change in April.
The core CPI, which excludes food and energy categories, also saw a slight dip, rising by 0.1% year-over-year. This aligns with forecast targets of 0.3% for the CPI and 0.2% for the April month. For the core CPI, the rise was slightly slower at 2.8%, topping the 2.9% forecast and matching the 2.8% rate of change in April. These trends suggest a gradual stabilization in inflation, though renewed concern persists.
Bitcoin, the world’s most valuable cryptocurrency, has seen a notable rise in recent weeks. The skyrocketing valuation of Bitcoin topped at $109,800, marking a six-day intraday record. Traders are actively involved in Bitcoin trading, particularly in the morning, reflecting their fear over inflation’s effects on the dollar and investor sentiment. The rising valuation underscores concerns about weak economic growth and potential strong inflation, which could erode investor confidence.
The Federal Reserve=?, particularly the CME FedWatch Tool, is showing optimism about future rate changes. Traders are fully pricing in two rate cuts, with the first expected in September and the second in December. The Fed aims to manage inflation through monetary policy adjustments, with a primary focus on the short-term rate, but central policymakers remain cautious. Historical data suggests that a rate cut is essential to prevent inflation from overheating.
