US CPI Inflation Eases To 2.5%, Is A Stock & Crypto Rally Ahead?

The US Consumer Price Index (CPI) data showed that the inflation has cooled to 2.6% in August, down from the market expectations. The much-awaited inflation is one of the crucial metrics that the US Federal Reserve gauges while deciding the policy rate plans. However, given the cooling figures, the central bank might move ahead with a dovish plan, which in turn could trigger a rally in the stocks and crypto market.

US CPI Eases To 2.5% In August

The latest Labor Department data showed that the much-awaited US CPI inflation came in at 0.2% in August, unchanged from the previous month’s figure and in line with the market expectations. On a year-over-year (YoY) basis, the inflation has cooled to 2.5%, down from the market expectations and from 2.9% in July. Besides, this also marks the lowest level since February 2021.

Simultaneously, the US Core CPI inflation rate, which excludes food and energy prices, came in at 0.3%, following a 0.2% surge in July. On a YoY basis, the Core CPI data showed that it remained unchanged from July at 3.2%.

The cooling data appears to have boosted the market sentiment, further cementing bets over a potential rate cut by the US Federal Reserve this month. Following the Labor Department’s release, the odds of a 25 bps Fed rate cut soared to 85% from 71% at the central bank’s September meeting, according to the CME FedWatch Tool report. Besides, now, the market is betting towards a 100 bps point cut this year.

Stocks And Crypto To Rally?

The easing figures have fueled speculations over its potential impact on the broader financial market. The lower interest rates usually boost the market sentiment, which in turn raises the risk-bet appetite of the investors.

Considering that, a flurry of market experts are anticipating a market rebound after this bullish data, especially amid concerns over a gloomy crypto market trading in September. In addition, a recent CNBC report, citing Pimco economist Tiffany Wilding, said that the recent data shrugs off concerns over a 50 bps rate cut in September.

Meanwhile, following the US CPI inflation data, the US 10-year Bond Yield rose 0.89% to 3.676. On the other hand, the US dollar index rose 0.10% to $101.689.

However, despite the cooling US CPI inflation rate, the financial markets traded in the red today in the early hours. As of writing, all three US indices as well as the overall crypto market were in the negative territory.

BTC price traded near the flatline at $56,759, while ETH price hovers near the 2,300 level. Simultaneously, some of the top altcoins like Solana, XRP, and DOGE, among others, also mirrored a similar performance. However, despite that, a recent Bitcoin price prediction hints at a potential rally for the flagship crypto to $71,670.63 in September.

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Rupam Roy

Rupam is a seasoned professional with three years of experience in the financial market, where he has developed a reputation as a meticulous research analyst and insightful journalist. He thrives on exploring the dynamic nuances of the financial landscape. Currently serving as a sub-editor at Coingape, Rupam’s expertise extends beyond conventional boundaries. His role involves breaking stories, analyzing AI-related developments, providing real-time updates on the crypto market, and presenting insightful economic news.
Rupam’s career is characterized by a deep passion for unraveling the complexities of finance and delivering impactful stories that resonate with a diverse audience.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.