The latest US CPI inflation report is projected to show a hotter-than-anticipated figure, raising concerns across financial markets about the potential for hawkish moves by the Federal Reserve.
This anticipated inflation surge has shifted market focus, with muted trading activity across financial sectors as investors await the Labor Department’s CPI release. The crypto market, particularly Bitcoin, altcoins, and meme coins, has seen a pullback as investor sentiment reacts to inflation concerns.
Market giants like Goldman Sachs and Bank of America predict a stable 2.4% CPI rate for October, matching September’s data. In contrast, Wells Fargo, JP Morgan, CITI, HSBC, and others forecast a slight increase to 2.6%, marking an uptick that could influence investor sentiment and the Fed's December policy direction. Recently, the Fed introduced a 25-basis-point rate cut, yet a higher CPI reading could complicate the possibility of further easing.
Despite the anticipated inflation rise, many analysts foresee a temporary slowdown in the crypto rally, which initially surged following Donald Trump's election win. The CME FedWatch Tool shows a 62% probability of another 25 bps rate cut in December, though there is debate over the Fed’s next steps. Market experts maintain an optimistic outlook, suggesting the market is positioned for a rally post-inflation release. Veteran trader Peter Brandt has issued a bullish prediction, estimating Bitcoin could reach $327K despite near-term volatility.
As the Fed's next move and inflation data come into focus, speeches from Fed Chair Jerome Powell and other officials will likely shape market sentiment. Powell’s recent remarks suggested cautious rate adjustments, capturing investor attention and hinting at a possible rally for digital assets in the near future. The favorable crypto stance stemming from Trump’s campaign promises is also expected to support sentiment and fuel potential market recovery in the days ahead.
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