Markets climb as inflation continues to stabilize

The year-over-year inflation rate came in at 7.1% today, reinforcing the market’s belief that inflation may have peaked and that the Federal Reserve may be easing its aggressive monetary policy.

Inflation is running out of steam

The Consumer Price Index (CPI) for November came in at 7.1% today, reinforcing hopes that inflation has peaked and entered a steady downward trend. This figure is 0.2% lower than the 7.3% print expected by analysts for this month; it also marks a 0.6% decrease from October’s CPI of 7.7%.

Markets reacted positively to the print, with BTC and ETH initially rising 4.65% and 6% respectively on the day – briefly touching $18,000 and $1,350 – before falling back slightly. At the time of writing, the major crypto-currencies were trading at $17,780 and $1,327 respectively.

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The reaction of the traditional markets was similar. The S&P 500 opened up 2.60%, the Nasdaq up 3.60% and the Dow up 2%. However, they quickly gave back some of their gains and are currently only up 1.31%, 0.59% and 2.43% respectively.

Signs of slowing inflation are certainly welcomed by the crypto-currency market, as they foreshadow a potential easing of the aggressive monetary policy that the Federal Reserve has been pursuing throughout the year. To combat soaring prices for consumer staples, the U.S. central bank began raising interest rates in March – first by 25 basis points, then by 50 basis points, and finally by 75 basis points each month, quickly taking them from around 0% to around 100%. to around 4%..

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Federal Reserve Chairman Jerome Powell indicated in a public appearance two weeks ago that the next rate hike might only be 50 basis points, citing the need to “moderate the pace of…rate hikes“because of slowing inflation and the lagged effect of rapid rate hikes on the economy. However, Powell reiterated his intention to bring inflation back to 2 percent. The central bank will announce its decision on the next hikes tomorrow at 2:00 p.m. EST.

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