Federal Reserve Inflation Gauge Eases, Crypto Market Reacts

The Federal Reserve's inflation gauge has shown signs of easing, prompting significant reactions across financial markets, including cryptocurrencies. According to the Labor Department, the February consumer price index (CPI) rose by a seasonally adjusted 0.2% from January, bringing the annual inflation rate to 2.8%, below expectations of 0.3% monthly and 2.9% annually. Core CPI, excluding volatile food and energy costs, increased 0.2% monthly and 3.1% yearly, also underperforming expectations of 0.3% and 3.2%, respectively.

The crypto market saw mixed reactions following the release. Bitcoin surged as much as 5%, while Ethereum dipped 0.87%. Altcoins like XRP, SOL, and ADA gained over 3%, with Pi Network soaring 19%. However, Tron, Aptos, Aave, and Ethereum Classic posted losses ranging from 1% to 7%. Historically, lower inflation and potential rate cuts have bolstered risk assets, including cryptocurrencies.

The CME FedWatch Tool indicates the market is pricing in three quarter-point rate cuts this year. The producer price index (PPI), another key inflation gauge, is set for release this week. These figures precede the Federal Reserve's March meeting, where officials are expected to maintain a wait-and-see approach, likely keeping rates unchanged as they seek further clarity on inflation trends.