The U.S. CPI inflation came in well below expectations, providing a bullish outlook for Bitcoin and the broader crypto market. BTC sharply reacted to the data release, which could pave the way for more rate cuts from the Federal Reserve.
U.S. CPI Inflation Comes In Below Expectations, Bitcoin Price Rises
Bureau of Labor Statistics (BLS) data show that the CPI fell to 2.7% year-over-year (YoY) in November, well below estimates of 3% and the 3.1% recorded in September. Core CPI came in at 2.6%, also way below estimates of 3% and the 3.0% recorded in October. This marks the lowest level for the core CPI since March 2021.
The Bitcoin price sharply rose on the back of the U.S. inflation data release, climbing above $88,000 from an intraday low of around $86,000. The flagship crypto is now up almost 3% on the day and looking to hit the $89,000 psychological level.
The macro data marks a positive for BTC and the broader crypto market, as it indicates that inflation in the U.S. is cooling despite concerns among Fed officials who are advocating against further rate cuts. Notably, Fed Governor Chris Waller stated that he doesn’t expect inflation to reaccelerate, which is why he believes the focus should be on the job market, which he claimed is calling for more cuts.
The U.S. CPI inflation data release follows the release of the U.S. jobs data, which dropped earlier this week. The unemployment rate came in at 4.6%, the highest since 2021, indicating that the labor market continues to weaken. These macro data make a case for a January rate cut. However, crypto traders are still betting on the Fed to hold rates steady next month.
The Fed Should Make More Cuts
The cool U.S. CPI inflation reading has led to calls for more rate cuts next year. Market expert Anthony Pompliano remarked that inflation came in well below expectations, which means the Fed should cut interest rates by 50 basis points.
U.S. President Donald Trump is also calling for larger cuts as he wants interest rates to drop to as low as 1%, noting that there is no inflation. The U.S. president recently stated that he will soon announce his nominee for Fed chair, who he revealed supports lower rates.
White House advisor Kevin Hassett is currently the favorite to replace Powell, according to Polymarket data. Hassett stated today that it is appropriate for the Fed to lower rates right now.