U.S. CPI Inflation Falls to 4.9% in April; Bitcoin Rises Above $28K

The annual U.S. inflation rate slowed to 4.9% in April from 5.0% in March and versus economist forecasts for 5.0%, according to the Bureau of Labor Statistics’ (BLS) Consumer Price Index (CPI) report Wednesday morning.

The price of bitcoin (BTC) rose more than 1% to just above $28,000 in the minutes following the news.

For the month of April, the CPI rose 0.4% against expectations for 0.4% and versus 0.1% in March.

The core CPI – which strips out food and energy costs – rose 0.40% in April versus forecasts for 0.4% and March’s 0.4% advance. The annual core CPI rate in April was 5.5% versus forecasts for 5.5% and March’s 5.6%.

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At its last meeting earlier in May, the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) indicated it’s considering at least a pause in its historic run of rate increases that’s seen the central bank take the benchmark fed funds rate from about 0% in early 2022 to the current targeted range of 5.0%-5.25%. While that fast pace of rate hikes hasn’t succeeded in bringing inflation down to the Fed’s 2% target, the central bank also has its eyes on the growing troubles in the U.S. banking system, which has led to the failure of a number of regional lenders, most recently First Republic Bank.

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For the moment, traders are betting this morning’s very modest moderation in inflation might give the Fed room for easier monetary policy. The U.S. 10-year Treasury yield has declined seven basis points to 3.45% and the 2-year nine basis points to 3.94%.

Edited by Stephen Alpher.

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