U.S. CPI Softer Than Expected at 0.3% in April; Bitcoin Rises to $63.7K

Both headline and core inflation rates fell modestly in April

April retail sales data also showed some softness

Bitcoin rose more than 1% on the news, weighed down by recent ideas that interest rates will stay higher for longer.

According to the government’s Consumer Price Index (CPI), the monthly inflation rate in the United States eased slightly in April; It rose 0.3%, compared with 0.4% in March and economists’ forecasts of 0.4%.

The rest of the report also showed small decreases in line with expectations. On an annual basis, CPI increased by 3.4% compared to the forecasts of 3.4% and 3.5% in March. Core CPI, which excludes food and energy costs, rose 0.3% in April versus forecasts of 0.3% and 0.4% in March; On an annual basis, core CPI increased by 3.6%, compared to forecasts of 3.6% and 3.8% in March.

Bitcoin {{BTC}} price rose more than 1% to $63,700 in the minutes following the report on Wednesday morning. While the spot ETF catalyst has been off-line over the past few weeks as inflows have slowed or even reversed, the Bitcoin price has been under pressure on the idea that interest rates will remain high for longer.

The steady decline in inflation in 2023 comes amid expectations that monetary policy will be noticeably easier throughout the year, including from the US Federal Reserve coming into 2024. Instead, inflation has risen slightly so far this year. With an economy continuing to grow, the thought of the central bank cutting interest rates anytime soon is confusing. Coming into Wednesday’s CPI report, the odds of the Fed cutting rates in the summer were low, according to the CME FedWatch Tool, and traders priced in only a 50% chance of a move in September.

Concurrent with the inflation figures, retail sales data for April also showed a flat reading compared to forecasts of a 0.4% increase and a 0.6% increase in March. Retail sales ex-automobiles increased by 0.2% in April, in line with expectations, but decreased compared to 0.9% in March.

When traditional markets are examined, there is a positive reaction to weak inflation and economic data; S&P 500 futures rose 0.5% and the 10-year Treasury yield fell seven basis points to 4.37%. While the US dollar index decreased by 0.5 percent, gold gained 0.7 percent.