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The latest CPI data would unlikely impact the Fed’s interest rate decision in March despite Donald Trump’s insistence on lowering interest rates.
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Bitcoin and the broader cryptocurrency market turned red on Wednesday as the United States inflation rate came in higher than expected, raising concerns about macroeconomic pressures on digital assets.
Bitcoin (BTC) briefly tumbled below $95,000 on Wednesday, Feb. 12, minutes after the release of US Consumer Price Index (CPI) data, which showed annual inflation at 3% in January 2025 — 0.1% higher than expected.
The US Bureau of Labor Statistics on Feb. 12 reported a CPI monthly increase of 0.5%, exceeding the reported Dow Jones forecast by 0.2%.
Monthly CPI adjustments in the period from January 2024 to January 2025. Source: US Bureau of Labor Statistics
January’s rise in inflation was the largest monthly inflation increase in a year.
Trump reiterates that interest rates should be lowered
The CPI data came amid US President Donald Trump’s urge to cut interest rates in a post on the social media platform Truth Social.
“Interest rates should be lowered, something which would go hand in hand with upcoming tariffs! Let’s Rock and Roll, America!” Trump wrote.
Source: MarioNawfal
Trump’s comments came a day after Federal Reserve Chairman Jerome Powell said that the central bank does not need to rush to cut interest rates.
“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell stated.
Trump previously slammed Powell and the Fed, arguing that they “failed to stop the problem they created with inflation” and had done a “terrible job on bank regulation” in late January.
The president also previously claimed that he would “demand that interest rates drop immediately” on Jan. 25.
Trump tariffs impacting inflation?
The worse-than-expected inflation data wasn’t surprising given that January “often sees seasonal price increases,” according to The Coin Bureau founder Nic Puckrin.
“It would be an error to attribute this to President Trump’s tariffs,” Puckrin said, adding that Trump’s policies would likely have an “unexpected disinflationary effect.”
Source: Kev_Capital_TA
He also suggested that the latest CPI data would unlikely impact the Fed’s interest rate decision in March.
Related: Bitcoin stumbles as Trump announces 25% steel and aluminum tariffs
“Rather, the Fed will be watching unemployment figures coming out on March 7, as well as its preferred inflation measure – the PCE [Personal Consumption Expenditures] index – on Feb. 28,” Puckrin said, adding:
“However, I wouldn’t be surprised if the latter comes in lower than expected, easing concerns over the impact of Trump’s tariffs.”
The crypto analytics firm Steno Research previously reported that Bitcoin would likely see more selloffs amid rising US inflation as it creates an unfavorable macroeconomic backdrop for risky assets.
On the other hand, interest rate cuts have been previously associated with higher inflows in crypto investment products.
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This article first appeared at Cointelegraph.com News
