u.today
A Federal Reserve inflation gauge has shown signs of easing, sparking reactions across financial markets, including cryptocurrencies. As inflation pressures lessen, investors are reassessing their positions, leading to price movements on Bitcoin and other digital assets.
According to the Labor Department, the February consumer price index was softer than expected, rising a seasonally adjusted 0.2% from January, bringing the annual inflation rate to 2.8%. Dow Jones economists were expecting monthly and yearly gains of 0.3% and 2.9%, respectively.
The U.S. February unadjusted CPI annual rate was recorded at 2.8%, the lowest since November last year; the U.S. February seasonally adjusted CPI monthly rate was recorded at 0.2%, the lowest since October last year. The U.S. February unadjusted core CPI annual rate was recorded…
— Wu Blockchain (@WuBlockchain) March 12, 2025
Core CPI, which excludes volatile food and energy costs, increased 0.2% in the month and 3.1% over the year. That is lower than expected, with a 0.3% monthly gain and 3.2% annual growth.
Historically, lower inflation and potential rate cuts have boosted risk assets, including cryptocurrencies.
How crypto market reacted
The crypto market price action was mixed following the release after initially moving higher. Bitcoin rebounded as much as 5%; on the other hand, Ethereum was slightly down 0.87%. XRP, SOL and ADA were up over 3% in the last 24 hours at press time; social cryptocurrency pi was up 19% in this time frame. Tron, Aptos, Aave and Ethereum Classic were in the red, posting losses between 1% and 7%.
According to the CME FedWatch Tool, the market was most recently pricing in three quarter-point rate decreases this year.
The producer price index, another inflation gauge, is due out Thursday. Both readings should shed some light on the health of the U.S. consumer in the face of recent indicators that the economy may be softening.
These figures come ahead of the Federal Reserve's March meeting, which takes place later this month. The Federal Reserve is patiently sitting in wait-and-see mode for further clarity on the inflation outlook, with officials largely expected to hold rates unchanged at next week's meeting.