U.S. inflation continues to fall

The crypto world is waiting for interest rate cuts. Are current inflation rates enough for the Fed to satisfy this desire?

The American Bureau of Statistics has new inflation data disclosed.

Compared to the same month last year, consumer prices did increase by 3 percent. Compared to May's inflation, however, values fell 0.3%.

Food and housing costs rose another 0.2% compared to last month. In contrast, energy costs fell 2%.

Analysts previously assumed a 3.1% increase. Thus, inflation fell more than expected.

Update 14:45: Cautiously optimistic, the crypto market reacted to this news. Since the announcement of the inflation figures at 2:30 p.m., the Bitcoin price rose nearly 0.8% to $59,173. Ethereum benefited even more. During the same period, ETH rose 1.2% to currently $3,194.

Much more important, however, is whether this drop in inflation is enough for the U.S. central bank Federal Reserve (Fed) to cut interest rates. It is currently between 5.25 and 5.5%. The Fed's next meeting will take place on July 31. However, experts estimate an interest rate cut in July as unlikely, partly because recent figures on the U.S. labor market previously argued against such a move.

According to CME FedWatch an interest rate cut in the U.S. could become more likely starting in September.

On the other hand lowered the European Central Bank (ECB) last month raised interest rates in Europe.

In general, risky assets like Bitcoin benefit from interest rate cuts because they make loans cheaper and increase liquidity. This potentially allows more capital to flow into risky investments like Bitcoin. Moreover, with lower interest rates, investors look for higher returns, which makes Bitcoin more attractive.