The latest report from the Bureau of Labor Statistics showed a slight increase in US inflation of 0.2% in July, bolstering expectations that the Federal Reserve will keep interest rates stable during the upcoming September meeting. Despite a notable spike in inflation as evidenced by the Consumer Price Index (CPI), crypto prices remained stable on Thursday. The consumer price index in July showed an increase of 3.2% year on year, which is slightly lower than economists’ forecasts. This followed a 3% slowdown in annual inflation in June. Consumer prices rose 0.2% m/m in both July and the previous month. The main driver of the index’s monthly gains were house prices, which rose 0.4%, accounting for 90% of the overall rise in the CPI. In contrast, the release of the CPI report had a minimal impact on Bitcoin, which maintained its stability by about at $29,600. This could signal an increased appetite for risk-taking among traders and investors, potentially favoring assets like Bitcoin and reinforcing the prevailing dovish sentiment in the market.
In response to a surge in inflation in early 2022, the US Federal Reserve embarked on an unprecedented tightening of monetary policy, raising its target federal funds rate by more than 500 basis points over the past 17 months. The Fed’s latest rate hike came during the June policy meeting. As the fight against inflation continues, the July CPI report will be one of several factors discussed by the Federal Reserve at the upcoming Federal Open Market Committee meeting scheduled for September.