BTC, ETH rise after U.S. CPI shows slower November inflation

Consumer prices went up 0.1% in November, slower than expected. This is a sign that the Federal Reserve's plan to slow inflation is working. The biggest cryptocurrency, Bitcoin (BTC), went up 1.6% in the minutes after the report came out and is now worth about $17,930. The Consumer Price Index (CPI) went up by 0.1% in November, which was less than expected.

Owais Qureshi December 13, 2022

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The U.S. consumer price index CPI went up 0.1% in November from the month before. This was slower than expected, especially compared to October, when it went up 0.4%. This is a sign that the Federal Reserve’s plan to slow down inflation is working.

Inflation eased in November, price increases slowed

The report drove up the prices of cryptocurrencies because people thought that less worrying increases in consumer prices CPI might give the Fed more room to stop raising interest rates.

The inflation numbers from Tuesday are likely to come up in their talk about the future direction of policy. The Consumer Price Index CPI rose by 7.1% in November compared to the same month last year. This was less than what economists had expected (7.3%) and less than the previous reading (7.7%). Prices also went up more slowly than expected from October to November.

The biggest cryptocurrency, Bitcoin (BTC), which has been pretty stable so far in December, went up 1.6% in the minutes after the report came out and is now worth about $17,930, which is 5.2% more than it was 24 hours ago. Ether (ETH), the native cryptocurrency of the Ethereum blockchain and the second overall, is up 6.9% in the last 24 hours to $1,335.

The Federal Open Market Committee (FOMC), which is in charge of setting monetary policy for the U.S. central bank, is meeting this week behind closed doors. On Wednesday, they will make a decision and make new predictions about how economic indicators will move in the future.

Core CPI, which leaves out food and energy because they tend to be more volatile, went up by 0.2% in November, which was also less than in October.

The inflation number was lower than expected and came a day after the Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations showed that people think inflation will run at a 5.2% rate over the next year.

The November CPI report is the last big economic report of 2022. It is also the last important piece of information the Federal Open Market Committee (FOMC) will get before their meeting this week, which starts on Tuesday. The two-day meeting will end on Wednesday with a statement at 2:00 p.m. ET and a new Summary of Economic Projections, or “dot plot,” from top Fed officials.

“The CPI report on Tuesday and the FOMC meeting on Wednesday will definitely set the tone for financial markets as we head into next year,” analysts at Deutsche Bank wrote in a note, expecting the Fed to raise rates by another 50 basis points (0.5 percentage points) on Wednesday.