Consumer prices rose as expected in December, a potential positive sign for risk assets hurt by changing expectations this month for interest rate cuts by the Federal Reserve.

The Consumer Price Index (CPI), which tracks price changes across a wide range of goods and services, rose 2.9% in the 12 months through December, according to the Bureau of Labor Statistics. He said Wednesday.

“Markets were losing some confidence in the thesis of lower inflation and the idea of ​​lower Fed rates,” said Zach Bandel, head of research at Grayscale. Decryption. “I think this report puts Fed rate cuts on the table again.”

Wednesday's inflation reading was highly anticipated, then Data Which indicates that the US economy was moving at a stronger pace than expected last week. Bitcoin price started at $102,000, falling below $93,000 after Friday. Reading Explosion Jobs.\

the Bitcoin price It jumped immediately after Wednesday's inflation snapshot, rising 1.5% to $98,500 In about 15 minutes. At the same time, the price reached... Ethereum and Solana New inflation numbers were also boosted, rising to $3300 and $192respectively.

Bitcoin held on to much of its post-election gains, but inflation fears have wiped it out since the cryptocurrency's price peaked at... $108,000 last month.

On a monthly basis, consumer prices rose 0.4% in December, slightly outpacing inflation from the previous month. Before that, the monthly inflation rate was 0.2% from July to October.

Inflation has fallen significantly in the United States from a four-decade high of 9.1% in 2022, but is still above the Fed's 2% target. Although Easing financial conditions Last year, Fed policymakers signaled that their quest to tame rising rates may not be over yet.

Policymakers believe that potential shifts in immigration and trade policy under President-elect Donald Trump could pose upside risks to inflation, Federal Reserve Minutes Released last week showed. With that in mind, the Fed indicated last month that it would likely cut interest rates by 25 basis points only twice this year, a decline from its previous forecast of cutting rates by 25 basis points only twice this year. Four interest rate cuts.

Given the recent strength of the US economy, some analysts believe that the Federal Reserve's monetary easing campaign will lead to an increase in... It could be over already. Traders on Wednesday predicted there was a 53% chance the Fed would cut interest rates once in 2025, or not at all, according to... CME FedWatch. That's down significantly from 70% on Tuesday.

Wednesday's report brought the lowest core CPI reading since July at 3.2%, below economists' expectations of 3.3%, Bandel said. Economists view core inflation, which excludes volatile food and energy prices, as a better measure of underlying trends.

“Before this report, the market was counting only one rate cut this year,” he said. “The idea of ​​a Fed rate hike this year is not on the horizon after this report.”

Low interest rates tend to be supportive of risk assets such as stocks and cryptocurrencies. They can contribute to inflation through lower borrowing costs and increased spending.

Basic personal consumption expendituresThe Fed's preferred measure of inflation will be released after the US central bank's meeting later this month. Amid signs of a strengthening economy, traders are confident that the central bank will keep interest rates steady.

Modified by Stacey Elliott.