By James Davis
For the second consecutive month, consumer prices have increased by 0.2%, according to July’s Consumer Price Index (CPI) report published by the United States Bureau of Labor Statistics on Thursday. The CPI is now up 3.2% over the past 12 months.
Nonetheless, today’s report did not affect the two market leaders, Bitcoin (BTC) and Ethereum (ETH). Data from CoinGecko indicates that BTC is priced at $29,359 while ETH is changing hands for $1,843. The two crypto assets were trading near their current prices before the CPI report, suggesting that they were not moved as many would expect.
Crypto Player Says CPI Report’s Relevance is Declining
Meanwhile, Lucas Outumuro, the IntoTheBlock Head of Research, says CPI reports are becoming less impactful in the cryptocurrency markets compared to a few months ago when Ethereum and Bitcoin would drop by more than 10% a few minutes after a CPI report release.
The latest CPI report is among the many factors the Federal Reserve will consider during its Federal Open Markets Committee (FOMC) next month. Since last year, the Fed has tried to lower inflation by increasing interest rates. Initially, the move caused crypto assets to plunge massively as investors found them less attractive.
The current inflation rate is still above the Fed’s target of 2%. Last month, the US central bank chair Jeremy Powell said he expects the target to be hit in early 2025. Meanwhile, the Chief Market Analyst at OANDA, Edward Moya, believes it is time for the Fed to change its approach to dealing with inflation. But whether this is something the central bank is also considering remains unclear.
Other Reports to be Discussed in the FOMC Meeting
Besides the CPI report, the Fed will also discuss the core CPI, which the central bank believes can accurately indicate the direction of inflation. Additionally, the Personal Consumption Index, expected to be published on August 31, will as well be considered during the next FOMC meeting.
That said, most crypto investors and traders are convinced that the Federal Reserve will continue hiking interest rates by 25 basis points until February 2024. The FedWatch Tool shows there is an 87% chance that interest rates will be increased by the expected margin.