U.S. prices rose modestly in June, suggesting inflation is subsiding, which could lead the Federal Reserve to cut interest rates in September, paving the way for higher prices for risky assets, including cryptocurrencies.
The Commerce Department reported Friday that consumer spending slowed slightly last month, and easing price pressures and a cooling labor market may give Fed officials more confidence that inflation is heading toward the central bank’s 2% target.
The data showed that the price index of personal consumption expenditures, the Fed’s preferred gauge of inflation, rose 0.1% last month after being flat in May, and was up 2.5% compared with goods and services measured a year ago. data Indicated.
Lower interest rates could lead to higher cryptocurrency prices as it makes borrowing cheaper for investors, with some analysts predicting the price of Bitcoin could rise to $100,000 this year. The asset is currently trading at $69,200, according to CoinGecko. data.
The Federal Reserve’s next policy meeting is scheduled for July 30-31. CME’s FedWatch toolThe report, which takes into account federal funds data from derivatives traders, suggests there is a 95.5% chance of no rate cut this month.
However, there is now a greater than 85% chance of a 25 basis point cut in September, with a 14% chance of a larger cut.
Earlier this month, former President Donald Trump Warned Federal Reserve Chairman Jerome Powell has resisted politicizing interest rates ahead of the U.S. presidential election, a move that could boost voter confidence in his handling of the economy and help Democrats retain power in November.
Former President and Republican Candidate Before Trump said the central bank would “probably” cut interest rates before the election, adding that “they know they shouldn’t do that,” and said he wouldn’t fire Powell before the end of his term as long as he was “doing the right thing.”
In any case, the timing of the US elections Additional pressure Central banks need to adhere to their congressionally mandated goal of maintaining impartiality.
Meanwhile, industry experts say Bitcoin stands to benefit from a change in government in Washington DC.
“Bitcoin will be highly correlated with the odds of a Trump election over the next four months,” said Rich Rosenblum, co-founder of trading firm GSR. Tweeted Saturday.
Speaking to a packed audience of 20,000 at the Bitcoin 2024 conference in Nashville on Saturday, President Trump said he would build a “strategic bitcoin reserve” and vowed to ensure that 100% of any bitcoin currently held or acquired by the U.S. government stays domestic.
While Trump’s speech had little impact on Bitcoin’s price, Rosenblum tweeted that the former president’s crypto policy pledges made it “impossible” for Vice President Kamala Harris to counter them.
That depends a lot on whether Harris’ platform includes any language focused on reforming the Securities and Exchange Commission and government-held bitcoin, the co-founders said.
