The latest Consumer Price Index (CPI) report by the U.S. Bureau of Labor Statistics revealed that inflation rose by 0.1% in March and 5% from a year ago. Despite this, annual inflation has dropped for nine consecutive months following the nine times the U.S. Federal Reserve raised the federal funds rate.
Investors were pleased to hear the latest U.S. Consumer Price Index (CPI) report on Monday, which noted that inflation has cooled over the last nine months. “The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1% in March on a seasonally adjusted basis, after increasing 0.4% in February,” the U.S. Labor Department explained on Wednesday. The news follows the U.S. central bank raising the benchmark interest rate by 25 basis points last month. The Fed has increased the federal funds rate nine times in a row, to a total of 475-500 basis points. The latest data indicates that inflation has dropped significantly since last year in the U.S., but it is still far from reaching the Fed’s stated goal of 2%.
Following the release of the CPI report, the global crypto economy’s total market capitalization jumped to $1.23 trillion. Bitcoin (BTC) is currently trading above the $30,000 range, up 0.80% after the Labor Department’s CPI report was published. Gold is up 0.81% and trading for $2,021 per troy ounce, while silver is up 1.82% to $25.60 per ounce on Wednesday morning at 9:30 a.m. Eastern Time.
The CME Fedwatch tool currently indicates a 67.5% chance that the Fed will raise the benchmark rate again by 25 basis points in May. Roughly 32.5% of investors using the Fedwatch tool are betting that there will be no rate hike next month. While the market is pricing in a 25-basis-point increase next month, several economists believe it will likely be the final rate hike of 2023.
Despite policymakers believing the inflation rate can drop down to the 2% region, economist and gold bug Peter Schiff has argued on several occasions that America’s “days of sub-2% inflation are gone.” Schiff reiterated this belief after the CPI report was published on Wednesday. “The catalyst for this morning’s $20 jump in the gold price is the March CPI rising a bit less than expected,” Schiff tweeted in response to the latest CPI data. “But core CPI still spiked 0.4%, which annualizes to over 5%. The real reason gold is rising is that high inflation is here to stay. Soon YoY CPI gains will hit new highs.”
Not everyone is as pessimistic as Schiff, however. The CEO of Your Money Line, Peter Dunn, talked about the CPI data on Wednesday and emphasized that people should feel good about the recent trends on News Nation.
The latest CPI report has sparked discussions on the impact on the economy. It is clear that inflation has cooled over the last nine months, but it is still far from reaching the Fed’s stated goal of 2%. The possibility of another rate hike in May is causing some uncertainty in the market, with some investors betting that there will be no rate hike next month. While some economists believe that this will be the final rate hike of 2023, others like Peter Schiff argue that high inflation is here to stay. Regardless of the differing opinions, it is important to keep a close eye on market fluctuations and trends.
