US Inflation Hits 3.4%: What it Means for Crypto Market

• Latest Consumer Price Index Data Indicates Inflation Rise to 3.4%
• December Inflation Number Breaks the Downtrend
• Fed Continues Interest Rate Increases

Latest Consumer Price Index Data Indicates Inflation Rise to 3.4%

The United States' Bureau of Labor Statistics (BLS) recently published the Consumer Price Index (CPI) data for December, revealing a surge in inflation to 3.4%, surpassing previous forecasts. This change signifies a departure from the past decreasing trend.

The latest inflation figure stands out as an increase from the 3.1% rate registered in the preceding month. Nevertheless, it is less when contrasted with the 4% rate in May and the 4.9% rate in April.

December Inflation Number Breaks the Downtrend

The current inflation rate has descended from 3.7% in September. The data for November, showing a rate of 3.1%, provided a minor relief. Despite this, the Federal Reserve (Fed) is yet to achieve considerable progress toward its 2% target rate.

For more than a year now, the Fed has been combating elevated inflation levels by implementing an aggressive policy-tightening strategy, which includes significant interest rate hikes to reduce demand and stabilize prices. The Fed predicts consistent declines in the face of persistent high inflation, seeing this as proof of the effectiveness of their strategy.

Fed Continues Interest Rate Increases

Starting March 2022, the Fed has steadily escalated interest rates through a series of sequential adjustments. Consequently, the benchmark federal funds rate has hit a target range of between 5 and 5.25 percent.

Furthermore, it is worthwhile to note that investors will keep a close eye on stock and cryptocurrency fluctuations in response to the newly released CPI figures. The inflation hike comes amidst a booming cryptocurrency market following the approval of a spot Bitcoin$42,260 -0.64% ETF in the United States.

Edited by Jonathan Stoker