U.S. CPI Drops 0.1%, Bitcoin Slips $150 – Inflation Down But Still Above Fed Target

• The Consumer Price Index (CPI) dropped 0.1% in December, in line with expectations.
• On an annualized basis, the CPI was higher by 6.5%, in line with expectations and down from 7.1% a month earlier.
• Bitcoin (BTC) slipped about $150 on the news, with traders having bid the crypto higher in the days leading up to this morning’s report in hopes inflation might decline ever more.

The United States Department of Labor released their latest report on the Consumer Price Index (CPI) for the month of December, indicating that the index had dropped by 0.1% compared to the previous month. This was in line with economists’ forecasts, and marks the sixth consecutive month of slowing inflation since it peaked in June at 9.06%.

The core CPI, which strips out volatile items such as food and energy, was also up 0.3% in December, in line with forecasts. Annualized core CPI was up 5.7%, also in line with forecasts and down from 6% in November. These figures are still well above the U.S. Federal Reserve’s 2% target.

The news of the CPI sent ripples through the cryptocurrency markets. Bitcoin (BTC) dropped by around $150, as traders had been bidding the crypto higher in the days leading up to the report in hopes that inflation would decline even further. Bitcoin had risen from around $16,500 at the start of the year to a one-month high of $18,250 earlier on Thursday.

The news of the CPI also had an impact on other markets, with stocks also declining on the news. As investors begin to reassess their investment strategies in light of the latest CPI figures, it remains to be seen whether the drop in inflation will continue or if the markets will adjust accordingly.

In the meantime, the U.S. Federal Reserve has maintained its position of keeping its target interest rate near zero and continues to engage in quantitative easing in order to support the economy. It remains to be seen whether these measures will be sufficient to stave off further inflationary pressure and support the recovery of the U.S. economy.