The latest US core Consumer Price Index (CPI), a key gauge of inflation, recorded a lower-than-anticipated increase of 3.1%, surpassing market predictions of 3.2%. This was accompanied by a slight 0.1% dip in overall inflation figures.
Matt Mena, a crypto research strategist at 21Shares, noted that the decline in inflation strengthens the case for the Federal Reserve to implement interest rate cuts this year. Such a move could inject vital liquidity into the economy and drive up the prices of riskier assets. Mena elaborated:
“Expectations for rate cuts have soared in reaction to this data. Markets now reflect a 31.4% probability of a rate cut in May, a figure that has tripled from last month. Meanwhile, the likelihood of three cuts by the end of the year has spiked over fivefold to 32.5%, and projections for four cuts have surged from just 1% to 21%.”
Despite the favorable inflation data, Bitcoin (BTC) saw a decline from its daily opening above $84,000, slipping to around $83,000. Traders are navigating macroeconomic uncertainties and concerns over US President Donald Trump’s trade policies, which have added volatility to the markets.
Is President Trump Strategically Impacting Markets to Push for Rate Cuts?
Federal Reserve Chairman Jerome Powell has repeatedly stated that the Fed is not in a rush to lower interest rates. This sentiment was reinforced by Federal Reserve Governor Christopher Waller during a speech on Feb. 17 at the University of New South Wales in Sydney, Australia, where he advocated for holding off on cuts until inflation decreases further.
These cautious remarks have raised concerns among market analysts, who argue that delaying rate cuts could lead to a downturn, causing asset prices to fall significantly.
On March 10, investor and market analyst Anthony Pompliano suggested that President Trump may be intentionally unsettling financial markets to pressure the Federal Reserve into reducing interest rates.
According to The Kobeissi Letter, the US government faces the challenge of refinancing approximately $9.2 trillion in debt before it matures in 2025.
Failing to secure lower interest rates for this debt could exacerbate the national debt, which has already surpassed $36 trillion, leading to soaring interest payments.
Given these factors, President Trump has placed significant emphasis on achieving rate cuts, even if it means short-term market turbulence for businesses and investors alike.
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