Markets just got a surprise gift from the April CPI report – annual inflation cooled to 2.3%, slipping below forecasts for the first time in months.
Crypto responded fast, with BTC and ETH spiking as traders jumped on hopes of a Fed pivot. But don’t let the green candles fool you. With Trump’s evolving tariff playbook and lingering macro uncertainty, this CPI surprise might be a short-lived breather in a much messier inflation narrative.
Here’s what the data shows, how crypto reacted, and why markets aren’t out of the woods yet.
Inflation Cools, but Not Cold Enough for the Fed
April CPI YoY came in at 2.3%, under the 2.4% forecast. Core CPI matched expectations at 2.8%. On a monthly basis, both headline and core inflation ticked up 0.2%, cooler than March’s pace and Wall Street estimates.
This marks the lowest annual inflation print since February 2021, which is a win – but a cautious one. The Fed’s 2% target is still out of reach, and policymakers aren’t likely to pivot just yet.
Still, for risk assets like crypto, this “not too hot” CPI was just enough to light a fire.
The Trump Tariff Factor
Here’s where things get tricky.
While CPI came in cooler, that may partly reflect recent tariff rollbacks – like the one slashing rates from 145% to 30% on Chinese tech. Add in 90-day pauses, and it’s clear: the full inflationary hit hasn’t landed yet.
Economists say importers likely front-ran purchases, rushing in goods before tariffs bite. So today’s soft print might be the calm before a storm.
The Fed, for now, is in “wait-and-see” mode. And that’s probably the right move.
“[I]n reality, the data for April is likely to be largely unaffected by President Trump’s announcements on Liberation Day,” said Julien Lafargue, chief market strategist at Barclays Private Bank, in an email.
“This is because exemptions were granted for goods that had left exporting countries before 2 April, and because consumers and businesses rushed to front-run tariffs in February and March.” He added, “As such, both the Fed and global investors will still need to be a bit more patient before they can properly assess the impact of the trade uncertainty on consumer prices.”
Crypto Spikes, Shorts Liquidated
Ahead of the data, crypto traded cautiously – BTC hovered around $102K. Everyone was clearly bracing for impact.
After the report, risk assets jumped slightly. Bitcoin popped to around $103,645, while Ethereum edged higher to ~$2,503. The move was modest but telling. Traders read the CPI miss as a sign the Fed might ease off the brakes, at least for now.
The move was fast, sharp and exactly what you’d expect when the Fed suddenly looks a bit less hawkish.
What Now? More Data. More Uncertainty.
This CPI may give the market a breather, but it’s not the all-clear.
Traders should watch:
- May PCE inflation
- FOMC minutes
- The real impact of tariffs over the next few months
Bottom line is: the real inflation fight isn’t over yet!
Never Miss a Beat in the Crypto World!
Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more.
FAQs
The April CPI report revealed a 2.3% YoY inflation rate, cooling expectations. This spiked BTC and ETH prices, as traders hoped for a Fed pivot.
Recent tariff rollbacks, including cuts on Chinese tech, may have masked inflationary pressures, with economists suggesting the full impact is yet to come.
April US CPI (Consumer Price Index) reported an annual inflation rate of 2.3%, showing a slower pace of price increases compared to previous months.
