Bitcoin Surges Above $28K as U.S. Inflation Rate Drops to 4.9% in April

On Wednesday morning, the Consumer Price Index (CPI) report from the Bureau of Labor Statistics (BLS) indicated that the annual inflation rate in the United States decelerated from 5.0% in March to 4.9% in April, which was slightly lower than economists' predictions of 5.0%.

After the news, the value of bitcoin (BTC) increased by over 1%, reaching slightly above $28,000 within a matter of minutes.

In April, the Consumer Price Index (CPI) increased by 0.4%, surpassing the expected rise of 0.4% and exceeding the 0.1% increase reported in March.

In April, the core Consumer Price Index (CPI), which excludes food and energy prices, increased by 0.4%, in line with expectations and matching the 0.4% rise recorded in March. However, the annual core CPI rate for April came in at 5.5%, slightly lower than the anticipated rate of 5.5% and lower than the 5.6% increase reported in March.

During its latest meeting held in May, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve hinted that it might pause its record-breaking streak of raising interest rates. This streak has propelled the benchmark fed funds rate from about 0% in early 2022 to the current targeted range of 5.0%-5.25%. Despite this aggressive pace of rate hikes, inflation has not been brought down to the Fed's target of 2%. Moreover, the central bank is also monitoring the increasing problems in the U.S. banking system, which have resulted in the collapse of several regional banks, including the recent failure of First Republic Bank.

Currently, traders seem to be speculating that the slight deceleration in inflation observed this morning may provide the Federal Reserve with more flexibility in implementing a looser monetary policy. This has caused the yield on the 10-year U.S. Treasury note to drop by seven basis points to 3.45%, while the 2-year Treasury yield has fallen by nine basis points to 3.94%.

Source Coindesk