The US inflation rate hit 7% in December, a four-decade high

By | January 12, 2022

The December consumer price index (CPI) in the US rose to 7.0 percent year-over-year, according to the latest inflation report. report from the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) on Wednesday.

The CPI is the most widely used method for tracking inflation. December inflation was the highest since June 1982, rising 0.2 percent from 6.8 percent in November. On the news of the inflation rate rising, Bitcoin, often seen as a hedge against inflation, is trading at nearly $ 44,000 at the time of writing.

US Consumer Price Index December (Bureau of Labor Statistics)

This is a strong bullish move for the number one cryptocurrency after trading sideways around $ 42,000 for almost a week. Bitcoin is still down around 36 percent from its all-time high on November 10 of last year.

Federal Reserve to raise interest rates

At the same time that rising inflation may be positive for the price of Bitcoin and perhaps other cryptocurrencies in the short term, a push from the US Federal Reserve to raise interest rates, as a means to combat inflation , could make Bitcoin less attractive as an asset. Similar bonds could become more attractive.

Federal Reserve Chairman Jerome Powell, recently re-nominated by President Biden, appeared before the US Senate Banking Committee on Tuesday and confirmed that inflation is still well above target, which “tells us that the economy no longer needs or wants the highly accommodative policies that we have ”. I have had instead. The Federal Reserve has previously stated that since inflation remains at these levels, the market should expect three interest rate hikes this year.

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