How will Today's Inflation Data Announcement Affect Bitcoin and the FED? Analysts Evaluated!

Today, critical inflation data, which FED attaches importance to for its interest rate decision, will be announced. FED kept interest rates unchanged in January, pausing the interest rate cuts in September, November, and December.

In this situation, while the expectation of an interest rate cut extends to June, the CPI data to be announced today carries critical importance.

At this point, while limited progress in inflation is expected in the US January CPI data, it is predicted that a CPI data below expectations will be positive for risky assets including Bitcoin (BTC).

Because lower-than-expected data, especially core inflation, may support further interest rate cuts, leading to a decline in Treasury yields and a weakening of the dollar index. It may also increase demand for risky assets such as Bitcoin.

However, analysts predict that investors expecting a big bull run will be disappointed, and even if there is an increase, it will be a limited one.

Analysts expressed that a possible change in interest rate cuts could boost BTC, but this would not be sufficient for Bitcoin to break out of the ongoing consolidation between $90,000 and $110,000.

What Are the Expectations for CPI?

BlackRock and RBC Capital analysts said they do not expect CPI data to prompt the Fed to lower interest rates.

According to Coindesk's report, RBC analysts predict that the trade war concerns initiated by Donald Trump's tariff move will increase inflation and lead the Fed to approach interest rate cuts more cautiously.

We do not expect the progress in inflation to be sufficient for the Fed to make additional rate cuts this year. We expect the January report to show a limited easing in price pressures.

BlackRock analysts said that even if CPI comes in below expectations, it is not very likely that FED will cut interest rates.

BlackRock analysts specifically said that the continued inflation in the service sector would prevent the Fed from lowering interest rates.

"Today, the US CPI data for January will be released. Although the December CPI report showed signs of reduced inflationary pressures, in our view, wage growth continues to remain above the level that would allow inflation to retreat to the Fed's 2% target. We see that persistent service inflation is forcing the Fed to keep rates higher for a longer period."

What Does Jerome Powell Think?

Federal Reserve Chairman Jerome Powell, in his speech at the Senate Banking Committee meeting yesterday, noted that low unemployment and inflation have remained above the Fed's 2% target.

Powell said the Fed is not in a hurry to cut interest rates again, considering the generally strong economy.