The Fed's loudspeaker shouts 'inflation has eased'; the market expects the Fed to cut interest rates as early as June.

U.S. December CPI and PPI data both unexpectedly fell, indicating a slowdown in inflation. PPI increased by 3.3% annually, with a 0% core monthly increase, while CPI increased by 2.9% annually, with a 3.2% core annual increase, both below or in line with market expectations. Market confidence in the Fed's rate cut has greatly increased, with Federal Interest Rate futures suggesting investors expect the Fed to cut rates in June this year. (Background: BTC big pump 'breaks through 100,000', will the market turn greedy after CPI eases?) U.S. has released December PPI (Producer Price Index) and CPI (Consumer Price Index) data for two consecutive days, both showing unexpected declines, significantly boosting market confidence in Fed rate cuts and stimulating market rebound. PPI increased by 3.3% annually, below the market's expected 3.4%, higher than the previous value of 3%, with a 0.2% monthly increase, lower than the expected 0.3%; core PPI saw no monthly increase, below the expected 0.3% and previous value of 0.2%. CPI increased by 2.9% annually, meeting expectations, slightly higher than the previous value of 2.7%, with a 0.4% monthly increase, also meeting expectations, slightly higher than the previous value of 0.3%; core CPI increased by 3.2% annually, below market expectations and the previous value of 3.3%, with a 0.2% monthly increase, also below market expectations and the previous value of 0.3%. Fed's loudspeaker: Predicting PCE with CPI and PPI Wall Street Journal reporter Nick Timiraos, known as the Fed's loudspeaker, tweeted that with December CPI and PPI data, economists predict a 0.17% monthly increase in core PCE prices (annualized close to 2%). This indicates that inflation pressure may remain at a moderate level, aligning with Fed's rate cut prospects. Nick Timiraos further stated that this will keep the 12-month core PCE rise rate at 2.8% and lower the annualized rates for 6 months and 3 months to 2.3% and 2.2%, respectively. This shows that although the U.S. economy has not completely shaken off inflation pressure, it is close to the Fed's 2% target, and short-term inflation pressure is expected to further ease. Fed Rate Cut Expectations Rebound With the easing of inflation, Federal Interest Rate futures show that investors estimate nearly a 50% chance of two rate cuts by the end of the year, with the first cut possibly happening in June. According to CME Group's FedWatch tool data, the market currently predicts a 44.6% chance of a 1-point rate cut at the June FOMC meeting, a 19.7% chance of a 2-point cut, and a 32.7% chance of no cut. Combining the latest inflation data and last week's strong job report, it is widely expected that Fed policymakers will keep Interest Rates unchanged at the end of this month's monetary policy meeting. However, traders have moved up their expectations for the first Fed rate cut from September to July. Some economists even believe that if the upcoming CPI report further cools down and non-farm employment data weakens, rate cuts could be initiated as early as March. Although the market welcomes the decline in CPI, Fed officials need to observe several months of weak data to confirm that inflation has truly returned to a cooling trajectory. In addition, Trump's inauguration next week is widely expected to intensify inflation pressure with his tariff policies, so the pace of Fed rate cuts still needs to be closely monitored. Related Reports U.S. stock market dominates the crypto world: BTC and Nasdaq index reach the highest correlation since 2022 Bond yields rise and Trump takes office, BTC falls below 90,000 and rebounds close to 100,000 Thinking: Why tighten monetary policy while the economy continues to rise? The Fed's loudspeaker shouts 'Inflation is easing'; the market expects the Fed to cut rates as early as June. This article was first published on the BlockTempo, the most influential blockchain news media in the blockchain field.