Inflation in the United States slowed its pace in July. This was softer than expected, especially as President Donald Trump’s new tariffs took effect. The calm numbers brought a sense of relief to cryptocurrency markets. Bitcoin jumped higher, passing $119,000. Ether also climbed, topping $4,400.
The Consumer Price Index, or CPI, tracks the cost of many goods and services. It rose 0.2% for the month. Over a full year, it increased by 2.7%. That yearly rate stayed the same as the month before. The U.S. Department of Labor’s Bureau of Labor Statistics released these figures on Tuesday. Economists had braced for higher prices due to Trump’s tariffs. They predicted a 0.3% monthly rise and a 2.8% annual jump, according to CNBC. So, these actual figures came as a surprise.
Looking at core inflation, which skips volatile food and energy costs, prices rose 0.3% in July. The yearly core inflation rate hit 3.1%. This was just above the 3% forecast. For comparison, June’s core figures were 0.2% monthly and 2.9% annually.
Crypto Markets React to Rate Cut Hopes
The financial world watched the inflation report closely. Traders knew these numbers could sway the Federal Reserve’s decisions on interest rates. The Fed often eyes inflation data when setting its monetary policy. They are trying to figure out if tariffs cause a one-time price bump or lead to lasting inflation.
Before the inflation data came out, Bitcoin was hovering around $118,500. After the news, it nudged up past $119,000. This was a modest but notable gain. Other major digital currencies followed suit. Ether, for example, saw a climb of over 5% in 24 hours. It successfully pushed past the $4,400 mark. The overall cryptocurrency market capitalization rose 0.7%.
Last month, the Federal Reserve chose to keep interest rates steady. While the CPI isn’t the only factor for their decisions, the latest data boosted market bets for a rate cut in September. Before the report, the chances of a cut were at 84%. Just fifteen minutes after the figures dropped, those odds climbed to 90%. This data comes from CME’s FedWatch Tool, as reported by CoinDesk.
As of this writing, Bitcoin is trading at $119,300. This marks a 0.6% increase in the last hour, according to CoinGecko.