- Today’s U.S. inflation numbers came in at 8.6%, hitting a fresh 41-year high and significantly exceeding economists’ expectations.
- Inflation reaccelerating despite the Federal Reserve’s efforts to tame it down signals a bearish outlook for risky assets like stocks and cryptocurrencies.
- The two largest cryptocurrencies, Bitcoin and Ethereum, fell by 2.6% and 3.7% on the unexpected news.
The consumer price index data shows that the U.S. annual inflation rate has hit a fresh four-decade record of 8.6%.
May CPI Prints at Four-Decade High of 8.6%
U.S. inflation data for May has topped economists’ expectations.
According to the latest data published by the U.S. Bureau of Labor Statistics today, the consumer price index increased by 1% on the month in May, placing the current annual inflation rate in the U.S. at a 41-year high of 8.6%. The bureau’s report shows that prices rose across the board, with costs for shelter, gasoline, and food being the largest contributors. The shelter index surged 0.6% in May, the most significant monthly increase since March 2004. The energy and gasoline indexes respectively rose by 3.9% and 4.1% after a temporary decline in April.
Last month’s temporary decline in inflation, which came in 20 basis points lower than in March, led many economists to believe that inflation had likely already peaked and that the Federal Reserve’s quantitative tightening policy would help keep lowering it over the upcoming months. According to a Wall Street Journal survey, economists had the May CPI forecasted at 8.3%, marking a significant misestimation of 30 basis points.
Inflation staying strong despite the Fed’s efforts to raise key interest rates and slowly begin unwinding its balance sheet may signal a bleak future for risk-on assets like stocks and cryptocurrencies. To bring inflation down to its targeted 2% rate, the Fed may have to start increasing interest rates beyond 50 basis points at a time or raise the pace at which it unwinds its balance sheet. This would make credit even more expensive, shrink the circulating supply of money within the economy, curtail consumer demand for goods and services, and eventually affect companies’ bottom lines.
Equities across the board have already corrected on the news, with the Nasdaq-100 and S&P 500 indices falling by 2.92% and 2.58% on the U.S. market’s opening. The cryptocurrency market hasn’t reacted well, with the two leading coins, Bitcoin falling by 2.6%, and Ethereum shedding 3.7% of its value. Smaller cryptocurrencies such as Aave, Chainlink, and Cardano, were hit harder, each falling by around 9%.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Prospects of Global Recession Rise as Inflation Hits Record 8.5%
News of record-high inflation rates in the U.S. hit the streets today. According to April data from the U.S. Bureau of Labor Statistics, the year-on-year consumer price index sits at…
Crypto Sinks Lower Despite News of Falling Inflation Rates
According to data released today by the U.S. Bureau of Labor Statistics, April’s year-on-year consumer price index has fallen to 8.3%, 20 basis points lower than the 41-year-high inflation rate…
Fed Raises Rates by 50 Basis Points
The Federal Reserve has raised interest rates by 50 basis points in the sharpest rate hike by the nation’s central bank since 2000. Fed Ramps Up Rate Hikes As was…
Federal Reserve Hikes Interest Rates
Earlier today, the Federal Open Market Committee, a key decision-making committee within the Federal Reserve System, concluded its March meeting. As anticipated, the Fed has made the decision to raise…