The year-on-year rise in consumer prices in March slowed from 6% to 5%, and on a monthly basis from 0.4% to 0.1%. After the data were published, Bitcoin jumped to its highest since June 2022, nearing $30,500.
Core inflation, which excludes food and energy costs, was 5.6% year over year and 0.4% month over month. The prior readings stood at 5.5% and 0.5%, respectively.
Analysts had forecast the CPI to slow to 5.1% year over year and 0.2% month on month, Core CPI to 5.6% y/y and 0.4% m/m, respectively.
The data released by the U.S. Bureau of Labor Statistics (BLS) came in somewhat better than economists expected. They ease concerns about the continuation of the Fed‘s policy-tightening cycle at the May 2–3, 2023 meeting.
The swap market pared the odds of a 25 basis-point hike in the policy rate from 80% ahead of the macro release to 60%. The futures market trimmed similar odds from 72.9% to 64.5%.
The data showed housing costs rose at the slowest pace since November, though they remained undoubtedly the largest source of monthly growth, the report said.
Excluding shelter and energy, prices for services rose 0.4% month on month, according to Bloomberg. The gauge rose 5.8% year over year, slowing the pace versus February.
Chair Jerome Powell and his colleagues emphasised the importance of accounting for the metric in assessing the inflation trajectory in the country, although they rely on their own calculations. The Fed regards wage growth as one of the key drivers of inflation in this category and therefore keeps a close eye on any changes in various measures of consumer spending, the agency said.
The cryptocurrency market reacted modestly positively to the BLS data. Bitcoin traded up, facing resistance near $30,400. Digital gold rose by about 1%.
Ethereum failed to clear the $1,900 level. The second-largest cryptocurrency recovered intraday losses.
According to CoinGecko, all top-10 cryptocurrencies by market capitalization were in the green over the last hour. Gains ranged from 0.7% (BNB) to 1.8% (Cardano).
The stock market reacted positively to the labour data. At the time of writing, Nasdaq-100 futures were up 0.7% and the S&P 500 by 0.55%.
Earlier in the month, on March 22, the U.S. Federal Reserve raised the target range for the federal funds rate to 4.75-5.00%.