The Consumer Price Index released today is not good news for the crypto market. CPI data showed inflation of 8.3% year-on-year, instead of the expected 8.1%. The core CPI was also worse than expected. As a result of this poor inflation data, a one percentage point interest rate hike is now highly likely, which is not good for the crypto market.
The CME Fed Watch Tool, which tracks information on the FOMC meeting, shows the possibility of either a 50 basis point interest rate hike or a 75 basis point hike. However, after the poor CPI data, there is a possibility of an increase of up to 100 bps.
The FOMC is responsible for making monetary policy to control inflation. Due to soaring inflation levels, the Fed has engaged in qualitative tightening. The FOMC consistently raises interest rates to curb inflation. In the June and July FOMC meetings, the Fed raised interest rates by 75 basis points.
The rise in interest rates In June led to a big fall in the crypto market. However, the next interest rate hike will not have the same effect as it may already be set. Likewise, experts believe that an interest rate hike of 75 basis points should be expected.
However, if the Fed raises interest rates by 100 basis points, it will most likely have the same effect as in June. Every Fed official has taken an aggressive stance on inflation and bad CPI data will only reinforce their commitment.
The next FOMC meeting will take place on September 21. CNBC analyst Jim Crammer revealed that he is not worried about excessive Fed hikes. However, other experts disagree.
BTC price is trading at $20,970 with a 6% fall in 24 hours.
