US CPI Expected At 3.1%; Will Fed Start Lowering Interest Rates Soon?

The crypto market participants eagerly await the U.S. Consumer Price Index (CPI) data, which is expected to be released on Thursday, July 11. Notably, the overall financial market will keep a close track of the crucial inflation data, as it may set the stage for the Fed’s future stance with their policy rate plans.

Here we explore the Wall Street estimates and the U.S. CPI data’s potential impact on the Fed’s rate-cut decision.

Wall Street Bets On Cooling US CPI Data

According to market estimates, Thursday’s inflation data is expected to give some relief to the financial market participants, let alone the crypto market. Notably, the U.S. CPI figure is expected to show that the inflation has cooled to 3.1% in June, following a surge of 3.3% in the prior month.

On a month-over-month (MoM) basis, the CPI inflation is expected to witness a slight advancement of 0.1%, after remaining unchanged in May. Talking about the Core CPI inflation, Wall Street is betting the MoM increase to remain unchanged at 2.2%. Besides, the YoY change in the U.S. Core CPI is also anticipated to remain stable at 3.4% in June.

Given the estimates of cooling inflation, the market is betting on a dovish stance by the Federal Reserve. In addition, the recent U.S. Jobs data seems to have bolstered market sentiment over a potential rate cut by the Federal Reserve in September.

Meanwhile, according to CME FedWatchTool, the market is anticipating a potential rate cut by the U.S. Federal Reserve in September by 25 bps points. Besides, another key inflation data this week, U.S. PPI data, will be released by the Labor Dept. following the U.S. CPI figures. Notably, investors will closely watch both these inflation indicators for potential cues on future market movements.

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How The Crypto Market Is Likely To Perform?

The Fed considers the U.S. CPI inflation data as a crucial metric to gauge the inflationary pressure in the nation. Having said that, the inflation data will be closely watched by investors for potential cues on the Fed’s upcoming move with their policy rate plans.

Although the market is betting on a potential rate cut in September, a hotter-than-anticipated U.S. CPI can dampen the overall market sentiment. Considering that, the investors should exercise due diligence before putting their bets into the market.

In addition, the market has gone through a heightened volatile phase lately, as evidenced by the performances of Bitcoin prices and altcoins. For context, the recent Bitcoin selloff by the German govt and Mt. Gox repayment woes have weighed on the market sentiment.

However, the recent market sentiment appears to have recovered, with the robust U.S. Spot Bitcoin ETF inflows, and anticipation over potential approval for the Spot Ethereum ETF soon. In addition, the recent filings for Solana ETF in the U.S. also hint towards a Bitcoin and altcoins rally soon.

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