Core CPI below expectations signals easing inflation, potential policy turning point in the crypto market or may occur

U.S. December Core CPI Year-over-Year Release at 2.6%, Below Expectations of 2.70%, and Flat Compared to the Previous Value. This seemingly 0.1 percentage point difference reflects a continued easing of inflationary pressures, which has important implications for the policy environment in the cryptocurrency market.

Data Interpretation: The Actual Significance of Inflation Being Below Expectations

Core CPI is an important measure of inflation, excluding volatile food and energy prices. This data being below market expectations indicates two key points:

Inflationary pressures are indeed easing

Although the 2.6% level remains above the Federal Reserve’s 2% long-term target, maintaining this level steadily suggests inflation is not accelerating. This offsets previous market concerns about an overheating U.S. economy.

Room for Market Expectations Adjustment

The expected value of 2.70% reflects prior worries about inflationary pressures. The actual lower figure indicates the economy’s resilience is not as strong as feared, and the Fed may not need to tighten excessively.

Policy Implications: Reassessing the Federal Reserve’s Policy Space

This data provides a relatively clear path for the Fed’s policy impact:

• Inflation below expectations does not support continued aggressive rate hikes
• Moderate economic data gives the Fed more room to observe
• Markets may adjust expectations for the 2026 policy path, shifting from tightening to neutral

This shift in policy expectations is generally positive for risk assets (including cryptocurrencies). Lower inflation expectations could ease real interest rate pressures, making risk assets more attractive.

Policy Window for the Crypto Market

The relationship between U.S. macroeconomic data and the crypto market lies in risk pricing. When inflation data exceeds expectations:

• The dollar’s appreciation pressure diminishes, giving non-U.S. assets a relative advantage
• Real interest rates may decline, increasing appeal for low-yield assets like Bitcoin
• Market expectations for Fed policy shift from tightening to neutral or easing

This does not mean the crypto market will immediately rise, but it does open a window for policy-friendly conditions. The key going forward will be the Fed’s actual actions and market consensus on the full-year policy path for 2026.

Summary

U.S. December Core CPI below expectations reflects a continued easing of inflationary pressures, creating space for the Fed’s policy adjustments. This signal is positive for the crypto market—it suggests the Fed is less likely to continue aggressive tightening, potentially improving the policy environment for risk assets. However, a single data point is insufficient to change the long-term trend; further observation of the Fed’s stance and other economic indicators is necessary to confirm whether a policy turning point has truly emerged.