CPI rebound has not appeared: Inflation data unexpectedly weak, market policy expectations change

U.S. December Core CPI Monthly Rate Registers Only 0.2%, Far Below Market Expectations. Behind This seemingly Ordinary Number, It Breaks the General Expectation of Economists and Could Reshape Market Perceptions of the Federal Reserve’s Policy Direction.

How Surprising Is the Data

According to the latest news, analyst Chris Anstey pointed out that the 0.2% core CPI monthly rate in December surprised the market. How unexpected is this result? The data speaks for itself: Out of 73 economists’ forecasts, only 11 predicted this level, accounting for less than 15%. In other words, about 85% of economists expected a higher CPI.

Why such a large deviation? The key lies in the abnormal previous data. The core CPI data for October and November were artificially low due to suspected measurement errors, leading economists to generally expect a “rebound” in December, with significant upward pressure on prices. But reality did not follow the script.

What Does This Mean

From an inflation perspective, this data releases several important signals:

Inflationary Pressure Continues to Ease

A 0.2% monthly rate may seem mild, but it is highly significant in the current environment. It indicates that inflation has not rebounded as economists feared, and price pressures remain under control. This aligns with the Federal Reserve’s consistent narrative of “inflation returning to target.”

Policy Expectations Face Adjustment

CPI data is a crucial reference for the Fed’s monetary policy decisions. When data continues to be below expectations, market expectations of the Fed’s policy path will adjust accordingly. If inflationary pressures indeed ease, the Fed may have more room to maintain a relatively accommodative stance or slow down rate hikes.

Why Crypto Markets Should Pay Attention

Why do macroeconomic data like this influence the crypto market? The logical chain is as follows:

• CPI below expectations → Signal of easing inflationary pressure → Market shifts from “maintaining high interest rates” to “potentially more flexible” → Increased attractiveness of risk assets (including cryptocurrencies)

Specifically, when markets expect interest rates to remain relatively low, cryptocurrencies like Bitcoin, as non-traditional assets, tend to attract more capital. Conversely, if CPI data shows high inflation, expectations of continued aggressive rate hikes by the Fed will strengthen, putting pressure on crypto markets.

What to Watch Next

One month of data is not enough to determine a trend; the market needs to continue observing:

• Whether CPI data in January and subsequent months remains moderate
• Specific comments from Fed officials on this data
• Changes in market expectations for the Fed’s next policy steps
• Other economic data (employment, GDP, etc.) supporting the “inflation easing” judgment

Summary

The December core CPI monthly rate of 0.2%, lower than expectations, broke most economists’ forecasts and reflected that inflationary pressures have not rebounded as expected. This could alter market expectations of the Fed’s policy direction, indirectly affecting risk appetite in the crypto market. Although a single month’s data is insufficient to determine a major trend, this signal warrants close attention from crypto market participants. Future policy statements and economic data will be key to market direction.