- US inflation data was reported at a higher than expected rate of 3.1%.
- Despite a higher-than-expected inflation rate, BTC’s price recorded a 4.89% surge in one day.
- The dollar index is showing an increase following the inflation report.
US inflation data for January was announced at 13:30 UTC, just before the stock market opened. In January, inflation in the US occurred at an annual rate of 3.1%, while monthly inflation stood at 0.3%. Economists had predicted a decrease in the annual consumer price inflation from December’s 3.4% to 2.9%.
The decline in inflation towards the end of last year prompted central bankers in the U.S., Europe, and the United Kingdom to reject further interest rate hikes and discuss the possibility of cuts. However, the fact that inflation is currently above expectations may further fuel these discussions.
Last month, Federal Reserve Chairman Jerome Powell stated that the Federal Open Market Committee expected to cut interest rates three times this year. However, with the Fed’s inflation target set at 2%, this still appears to be a distant goal.
The Fed’s preferred inflation gauge is the core personal consumption expenditures (PCE) index, which has fallen more than the Consumer Price Index (CPI). The core PCE index was 2.9% on an annual basis in January, marking the first time it fell below 3% in about three years.
The next Federal Reserve interest rate decision meeting is scheduled for March 19-20, where officials will release a dot plot showing projections for interest rates, inflation, and unemployment.
Following the release of inflation data in the U.S., the price of Bitcoin experienced a massive surge and spiked to $51,60.84. Despite a higher-than-expected inflation rate, traders became optimistic and contributed to a 4.89% surge in BTC’s price. Currently, Bitcoin is trading at $51,770.76 at the time of writing.
In addition to the cryptocurrency market, the Dollar Index (DXY) rose by 0.8% to reach 104.870 points following the release of the inflation report. Meanwhile, the price of gold showed a decline of 1.6%, falling to the $1995 level.
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