U.S. Federal Reserve Chair Jerome Powell’s speech reflected slightly hawkish comments on restrictive monetary policy and interest rate cuts amid ongoing inflationary pressures and a strong labor market. The progress toward bringing inflation back down to its 2% target this year has stalled as some raised stagflation concerns, which were denied by Powell again.
He said the US economy remained resilient amid a strong labor market. Speaking about inflation, he hinted at concerns over the hotter inflation in recent months causing the Fed to lose confidence in earlier rate cuts this year.
The U.S. Bureau of Labor Statistics released the PPI inflation data for April today, which comes in hot. The monthly PPI increased 0.5% against the expected 0.3%. The monthly core PPI was up 0.5%, much higher than forecasts of 0.2%. The annual PPI was steady at 2.2% and the annual core PPI rate went up to 2.4% from a downwardly revised 2.1%.
Jerome Powell said the Fed will continue to analyze further quarter economic data and fight inflation to bring to the 2% target, denying any rate hike. Other Fed officials were hawkish on rate cuts and commented on lesser rate cuts this year.
Crypto and Stock Market Reactions
Crypto and stock markets remain under pressure as traders await key CPI inflation data due Wednesday. The market expects a fall in annual CPI inflation to 3.4% from 3.5%.
The US stock market has opened flat as traders digest fresh PPI data and wait for CPI numbers for further guidance on market trends. CME FedWatch Tool shows a 49% probability of 25 bps rate cuts starting September, with further rate cuts expected in November and December.
The new inflation data caused US dollar index (DXY) to drop to 105 and the US 10-year Treasury yield also fell 4.471%. As Bitcoin moves opposite to DXY and Treasury yields, a rise in both has caused a downfall in Bitcoin price to $60k, triggering a crypto market selloff.
BTC price fell nearly 3% today but rebound suddenly, with the price currently trading near $62,000 again. The 24-hour low and high are $61,156 and $63,422, respectively. However, the trading volume has increased by 11% in over the last 24 hours, indicating a rise in interest among traders.
Altcoins including Ethereum, BNB, Solana, Toncoin fell 2-8% in the last 24 hours amid PPI inflation and Fed Chair Powell’s speech.
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