US inflation data shook Bitcoin: “Goodbye to interest rate cuts”

Inflation in the USA increased above expectations. Inflation increased by 0.4 percent in March and annual inflation was 3.5 percent. Expectations were that inflation would be announced as 3.4 percent.

The inflation figure, which exceeded estimates, reduced the possibility of the Fed cutting interest rates in June. Additionally, the market has begun to price in a 50 basis point cut for all of 2024. According to CME FedWatch Tool, the probability of the Fed keeping interest rates constant is seen as 98.4 percent for May and 78 percent for June.

Morgan Stanley economists stated that concerns are increasing that the prediction of a rate cut in June may not come true. On the other hand, Regan Capital analyst Skyler Weinand stated that inflation is accelerating again and interest rate cuts are off the table in the near term. Bankrate analyst Greg McBride, in his note published after the inflation data, said, “We can now say goodbye to the interest rate cut in June. Inflation has been higher than expected, and the lack of progress towards 2 percent has now become a trend.” he commented.

Bitcoin fell after inflation data. While the number one cryptocurrency was traded at $69,000, it lost more than 2 percent in value and fell to $67,500.

Fed members will also look at Personal Consumption Expenditure Price Index (PCE) and Producer Price Index (PPI) data before the interest rate decision on May 1.