The US Bureau of Labor Statistics announced the December 2023 Consumer Price Index (CPI) data. Accordingly, US CPI increased by 0.3 percent in the last month. The index, which covers all items, increased to 3.4% on an annual basis, compared to the 3.1% increase in November. Following this development, gold and Bitcoin prices reacted with a slight decrease.
US CPI came warmer than expectations in December!
According to the statement, the all items index increased by 3.4% in the 12-month period ending in December. Thus, it was a larger increase than the 3.1% increase in the 12-month period ending in November. It was also higher than the market expectation of 3.2%. On a monthly basis, CPI increased by 0.3% compared to analysts’ forecast of 0.2%. The index for all items excluding food and energy increased by 3.9% in the last 12 months, following a 4.0% increase in November.
Core CPI, which excludes volatile food and energy prices, increased by 0.3% on a monthly basis, as expected. Annual Core US CPI decreased from 4% in November to 3.9% in this period. In the BLS press release, he included the following:
The housing index continued to rise in December, contributing to more than half of the monthly increase in all items. The energy index rose 0.4% during the month, with increases in the electricity index and gasoline index more than offsetting the decline in the natural gas index. The food index increased by 0.2% in December as in November. The in-home food index increased by 0.1% and the out-of-home food index increased by 0.3% during the month.
P.Markets will follow the Fed closely!
cryptokoin.comAs you follow from , financial sectors around the world, including crypto markets, had a volatile session this week following the highly anticipated Bitcoin ETF approval. However, today’s CPI data will provide important clues to understanding the Federal Reserve’s upcoming interest rate decision.
Since the beginning of the year, investors have been placing bets on how quickly and hard the Fed will cut interest rates. Fed futures pricing shows investors expect a 140 basis point (bps) easing this year, as opposed to a projected 160 basis point cut by the end of 2023. Still, it’s higher than the Fed’s projection of a 75 basis point cut later in the year. According to the CME FedWatch Tool, markets are pricing the probability of a rate cut in March at 69%.
Meanwhile, New York Federal Reserve Bank President John Williams made a critical statement on Wednesday. Williams said the Fed still has some way to go to return inflation to its 2% target. He also stated that it was too early to call for a rate cut. Today’s warmer-than-expected data will likely cause the Fed to act more cautiously to lower interest rates this year.
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