Consumer Price Index (CPI) of the United States (USA) rose 0.2% in February. However, inflation in the world’s largest economy reached 2.8%. The news was considered a positive surprise as it is below 2.9% expected in 12 months.

This inflation lower than expected increased risk appetite. This is because since traders now see a greater probability of cuts in the rates by the Federal Reserve (Fed) later this year.

US CPI below expectations by 2.8%

Bitcoin (BTC) responded with a modest movement upwards, rising to $ 83,371. The increase occurs because lower inflation reduces the likelihood of more monetary tightening and supports the feeling of risk. The stock markets also reacted positively, with the main rates registering gains after the disclosure.

Inflation in the US reflects in the crypto industry

If inflation continues to fall, the Fed can adopt a more dovish posture, potentially preparing the terrain for more liquidity to enter the markets.

Many analysts see this as a favorable wind for Bitcoin, which historically benefited from easier monetary conditions. Now all attention is focused on the next Fed Policy guidance, while traders seek confirmation that the path to rate cuts is opening.

A high number would not be very welcome (as usual). Especially during the uncertain times on the market as now, this type of economic data usually has a greater impact. A high number would probably make securities’ income rise again, which is the opposite of what management seems to be trying to reach today. In addition, it has the monetary policy meeting next week and the Fed will definitely look at this IPC data as well, commented analyst Daan Crypto Trades .

Meanwhile, this IPC data come after a good Jolts report on Tuesday, which gave the market a reason to stop falling. Jolts is a job vacancies and work turnover, done by Bureau of Labor Statistics, which measures jobs, layoffs, job vacancies, and layoffs in the US economy.

In fact, Fed President Jerome Powell said on Friday that the US Central Bank would adopt a cautious approach to the loosening of monetary policy, adding that the economy currently “continues in a good place.”