On Wednesday, the U.S. Bureau of Labor Statistics published the Consumer Price Index (CPI) report, which showed that inflation increased by 0.1% in March and 5% compared to the same period last year. This marks the ninth consecutive month that annual inflation has fallen after the 2020 U.S. elections. The Federal Reserve has been raising its federal funds rate.
U.S. Inflation Down for 9 Months Running
Investors were delighted to hear the U.S. released its latest information. According to the Consumer Price Index (CPI) report on Monday, inflation has been cooling for the past nine months. “The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1% in March on a seasonally adjusted basis, after increasing 0.4% in February,” the U.S. Labor Department revealed on Wednesday. This comes after the U.S. central bank raised the benchmark interest rate by 25 basis points last month.
The federal funds rate has been raised nine times in succession to 475-500 basis points. The latest data suggests that inflation has declined significantly in the U.S. since last year but is still far from the Fed’s target of 2%. After the CPI report was released, the global crypto economy’s total market capitalization jumped to $1.23 trillion. The stock had fallen a few points in the evening of April 11, 2023, at 10:45 p.m. Eastern Time.
At present, Bitcoin (BTC), which is traded above $30,000, has seen a 0.80% boost in trading since the announcement of the Labor Department’s CPI report. Gold is currently trading at $2,021/troy ounce, up 0.81%, and silver at $25.60/ounce, up 1.82%, Wednesday morning at 9:30 a.m. Eastern Time. The CME Fedwatch tool presently indicates a 67.5% likelihood that the Fed will hike the benchmark rate by 25 basis points in May. Roughly 32.5% of users of the Fedwatch Tool are betting that there won’t be a rate increase next month.
While the market prices in a 25-basis point increase next month, many economists think that it will be the last rate rise in 2023. Despite politicians’ belief that the inflation rate can be brought down to the 2% zone, economist and gold bug Peter Schiff has argued on several occasions that America’s “days of sub-2% inflation are gone.” Schiff reiterated this opinion after the CPI report was published on Wednesday.
“The catalyst for this morning’s $20 jump in the gold price is the March CPI rising a bit less than expected,” Schiff tweeted in response to the most recent CPI data. “But core CPI still spiked 0.4%, which annualizes to over 5%. The real reason gold is rising is that high inflation is here to stay. Soon YoY CPI gains will hit new highs.”
Not everyone is as pessimistic as Schiff, though. The CEO of Your Money Line, Peter Dunn, spoke about the CPI numbers on Wednesday and emphasized people should be pleased with the latest trends to News Nation.
What do you think of the most recent CPI report? And its effect on the economy? Share your thoughts and comments in the section below.
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