Alternative Data Shows US Inflation Cooling, Shaping Fed Outlook
Alternative inflation indicators point to a notable slowdown in U.S. consumer prices, strengthening the case for potential interest rate cuts and carrying implications for risk assets, including cryptocurrencies.
After the Federal Reserve kept rates unchanged last week and signaled no imminent easing, high-frequency inflation readings suggest policymakers may be trailing an improving inflation backdrop.
Truflation, an independent tracker that compiles millions of daily price observations from numerous data providers, reported broad-based cooling across its U.S. inflation gauges. As of Sunday, Truflation’s U.S. Consumer Price Index (CPI) measured 0.86% year over year, down from 1.24% the prior day. The platform’s estimate of core personal consumption expenditures (PCE) stood at 1.38%, below the Federal Reserve’s 2% target.
Source: Truflation
Truflation said its indexes are calculated daily on a year-over-year basis using millions of data points from tens of providers.
The readings contrast with official data showing annual CPI at 2.7% in December and core PCE at 2.8% in November.
Expectations for lower policy rates are typically seen as a headwind for the U.S. dollar, a dynamic that has historically supported risk assets such as Bitcoin (BTC) and the wider crypto market.
US dollar at an inflection point
Recent market signals indicate the U.S. dollar may be nearing a turning point, with technical and structural drivers increasingly influencing its path beyond monetary policy.
According to Barchart data, the U.S. Dollar Index recently posted a weekly close below a long-term support level that had held for more than a decade, a development that could imply further downside if sustained.
Source: Barchart
Some macro investors contend that a weaker dollar would help service dollar-denominated debts globally. Raoul Pal, founder of Real Vision, has argued that many market participants prefer a softer dollar for this reason and has also said a weaker dollar would align with the Trump administration’s growth objectives by easing financial conditions and bolstering global liquidity.
This report is for informational purposes only. Figures reflect data available as of publication and may be updated. Readers should verify information independently.
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