Bitcoin Dips After Inflation Comes in Slightly Hot

The Consumer Price Index (CPI) for January rose 0.5% versus 0.1% a month earlier, and in line with economist forecasts.

On a year-over-year basis, however, inflation was running somewhat hotter than hoped, coming in at a 6.4% pace in January versus 6.5% in December and against predictions for 6.2%.

The core CPI – which strips out food and energy costs – rose 0.4% in January, also in line with expectations and flat from 0.4% in December. Year-over-year core CPI in January was also faster than forecast at 5.6% versus 5.5% expected and down from 5.7% a month earlier.

The price of bitcoin (BTC) fell about $100 in the minutes following the news, trading at $21,770 at press time.

Traders are closely watching the pace of inflation, which remains elevated, but has been slowing for several months. A continued slowdown could give the U.S. Federal Reserve the space to perhaps pause its rate hike cycle. For now, markets continue to expect the central bank to hike its benchmark Fed Funds rate another 25 basis points at each of its next two meetings (in March and May), and then pause.

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