The Bitcoin exchange rate is reacting positively to the latest inflation data from the United States. At the moment, the crypto currency stands at $83,695, up 3% from the previous day.

Inflation lower than expected

Bitcoin's rise is related to lower-than-expected inflation in the US. Instead of the predicted 2.9%, inflation came in at 2.8% in February. This puts inflation close to the 2% target set by the Federal Reserve (Fed). By comparison, in January inflation was 3%.

Falling inflation increases the likelihood of interest rate cuts by the Fed. Lower interest rates stimulate economic growth and generally have a positive impact on risky assets such as Bitcoin. Therefore, the crypto market reacts immediately to these developments.

Fed approaches interest rate change

According to Kay Haigh of Goldman Sachs Asset Management, the Fed is likely to wait and see this month. However, he argues that the combination of declining inflation and increasing risks to economic growth suggests that the central bank is getting ready to continue its easing cycle.

For financial markets, relatively low inflation is a positive sign. In fact, more and more analysts are warning of a possible recession in the US. JPMorgan currently puts the probability of an economic downturn at 40%.

No effect of Trump tariffs

Another concern was whether the Trump tariffs, the import tariffs that the former president plans to reimpose, have already led to higher prices. As of yet, this does not appear to be the case.

Joseph Richter of Bloomberg Intelligence states: "The only clear result is that tariffs have not yet strongly affected the prices of goods."

Meanwhile, the independent think tank Truflation measures even lower inflation. According to their calculations, the current inflation rate in the US is only 1.35%.

Impact on the crypto market

In today's market update program, Sven Wagenknecht and Stefan Lübeck discuss the impact of inflation figures on the crypto market. Investors are keeping a close eye on developments, as monetary policy changes could have a major impact on the price of Bitcoin and other digital assets.