US Inflation Rate Rises to Four-Decade High of 7% in December

US Inflation Rate Rises to Four-Decade High of 7% in December
US inflation increases/courtesy

The Consumer Price Index (CPI) of the United States Labor Department, the most widely used measure of inflation, increased at an annual rate of 7.0 percent, exceeding economists’ expectations. This is the highest increase since June 1982, and it outperforms last month’s 6.8% increase.

The core CPI, which excludes the more volatile energy and food prices, increased by 0.6 percent month over month, outpacing economists’ expectations. This rate was 0.5 percent in November.

 

Bitcoin was trading at $43,741, up about 1% in the minutes since the Labor Department’s Bureau of Labor Statistics (BLS) released its report on Wednesday.

 

Because bitcoin’s supply is tightly controlled by the underlying blockchain’s original programming, many investors believe it can act as a hedge against inflation. Rising interest rates, on the other hand, may make fixed-income assets such as bonds more appealing, reducing the appeal of riskier investments such as stocks and cryptocurrencies.

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Jerome Powell is the chairman of the Federal Reserve.

 

President Biden renominated Federal Reserve Chairman Jerome Powell, who appeared before the Senate Banking Committee on Tuesday for a confirmation hearing.

 

Inflation remains well above the Fed’s target, according to Powell, “telling us that the economy no longer needs or wants the very highly accommodative policies that we’ve had in place.” Following the hearing, Bitcoin has gained 3.1 percent in the last 24 hours.

He went on to say that if inflation remains high and for longer than expected, the Fed may raise interest rates. According to CoinDesk data, Powell’s hints at higher interest rates in December were followed by a steady decline in bitcoin’s price, which is now around $43,000.

 

“The Fed expects inflation to last until mid-2022, at which point they will most likely begin to reduce their balance sheet,” said Edward Moya, senior market analyst at OANDA in the Americas. “The path of inflation may lead to faster rate hikes and a faster start to shrinking the balance sheet, which could be bearish for risk assets like cryptos in the short term, but equities will likely suffer more.”

 

“There is still significant money on the sideline waiting to buy Bitcoin, but many crypto traders are having a wait-and-see approach,” Moya said.

 

About Robert Oluoch

My focus is economic, politics, entertainment and gaming reviews. My aim is to depict the complication of life through the combination of words and creativity.

Have a tip we should know? tips@rhd.news

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