Bitcoin Price Surges in Response to US CPI Data Showing Inflation Has Cooled to 2.3%

The Bureau of Labor Statistics (BLS) released the CPI report on Tuesday, showing that inflation slowed down in April. The price of Bitcoin had a modest reaction as this change affects the interest rate trajectory of the Federal Reserve (Fed). US CPI Data: Bitcoin Prices Fluctuate Amidst Decreasing Inflation BLS released the Consumer Price Index inflation report (CPI) on Tuesday at 8:30 AM EST. According to the CPI, inflation in the United States rose at an annual rate of 2.3% in April, slightly lower than the rate recorded in March.

Notably, the year-on-year increase of (YoY) marks the lowest reading since February 2021. Key takeaways from the April CPI data include: CPI inflation in April DECREASED to 2.3%, lower than the expectation of 2.4%. Core CPI inflation is 2.8%, in line with the expectation of 2.8%. This is the third consecutive month that overall inflation has decreased. Inflation continues to cool down despite the trade war. Shortly after that, the price of Bitcoin increased slightly, from 103,590 dollars to 103,721 dollars at the time of writing.

The silent reaction occurs when the overall market momentum is bullish. The latest inflation figures do not change the sentiment; they are slightly lower than expected. CPI data, an important economic indicator measuring inflation, affects the monetary policy decisions of the Fed. When CPI data shows rising inflation, the market often predicts that interest rates will increase. However, cooling inflation or easing inflationary pressures, as was the case last April, could increase calls for the Fed to cut interest rates early. Such an action could put pressure on the dollar but boost interest in Bitcoin and cryptocurrencies. “CPI is one of the key indicators of the Fed, and this release could indicate whether tariffs are pushing inflation higher or not,” a user noted on X (Twitter). According to CPI data, the CME FedWatch tool shows that the market bets 88.6% on the likelihood that the Fed will keep interest rates unchanged at the current level of 4.50% in the meeting on June 18.

Before the CPI data was released, the market saw a 91.8% chance of the Fed keeping interest rates unchanged. Therefore, this decline indicates optimism about further rate cuts. CPI data shows the first signs of inflation related to tariffs. In the press conference following the policy meeting, Fed Chairman Jerome Powell noted that short-term inflation expectations have risen due to Trump’s tariffs. He also mentioned that it is time for them to wait before adjusting policy. However, President Donald Trump is putting political pressure on the Fed, urging the agency to cut interest rates. “The Fed would be MUCH BETTER if it CUTS INTEREST RATES when the tariffs from the United States start to transition ( easily!) into the economy. Do the right thing,” Trump wrote on Truth Social. In this context, some people speculate that the President may be right to advocate for interest rate cuts amid political battles over monetary policy. “Is POTUS right and Chairman Fed Powell wrong?,” Paul Barron quipped in a post. However, while today’s report does not show signs of inflation related to tariffs, the general view is that the full impact of the new policies on inflation may begin to manifest after a few months. The Fed’s stance is that the central bank wants to see the potential impact of tariffs reflected in economic data before allowing them to shape the path of monetary policy. “The risks of higher unemployment and higher inflation have increased, but they have not yet materialized. They really have not materialized. They are not really absent from the data… Our policy is in a very good position and the right thing to do is to wait for further clarity,” Powell stated. As a result, even weakness in next month’s payrolls could be temporary if tariff talks continue to move positively.