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Stocks and bonds, as well as Bitcoin (BTC) and altcoins, could be affected by the Eurozone inflation figures that were announced. The Consumer Price Index (CPI) in the Eurozone showed a year-on-year increase of 2.4% in November. The data was in line with the annual expectation of 2.4%. Core CPI also showed a year-on-year increase of 3.6% in November. An increase of 3.6% in core inflation was expected.
Inflation in the Eurozone Is Decreasing
The European Statistical Office (Eurostat) published the inflation data for November in the Eurozone. According to the published data, the annual inflation rate, which was 2.9% in October, showed an increase of 2.4% in November. Thus, inflation in the Eurozone fell by 0.5% in November compared to the previous month. Market expectations were for an annual inflation rate of 2.4% in the Eurozone in November.
Core inflation, which measures price changes in goods and services excluding the food and energy sectors, increased by 3.6% in November. Expectations were for the core inflation rate to be 3.6% on an annual basis in the Eurozone in November. Core inflation was 4.2% in October.
Both the annual inflation data and the core inflation decrease compared to the previous month, and their alignment with market expectations were noteworthy.
Eurozone Inflation and Cryptocurrencies
In the US markets, as inflation started to come in below expectations, pricing for the end of the Federal Reserve’s (Fed) monetary tightening had increased. Significant rises were seen in risky assets such as stocks, bonds, and cryptocurrencies. In this context, decreasing inflation in the Eurozone could lead to increased pricing for the end of the European Central Bank’s (ECB) monetary tightening and provide additional support for the rise in risky assets such as Bitcoin and altcoins.
The ECB, last week, left the three main policy rates unchanged in line with expectations. The statement from the ECB noted that the refinancing rate was kept at 4.50%, the deposit rate at 4%, and the marginal lending rate at 4.75%. The statement also mentioned that the ECB had decided to shrink its balance sheet more quickly.
On the other hand, the decision text emphasized that “The Governing Council’s future decisions will ensure that policy rates are set at sufficiently restrictive levels for as long as necessary. A data-dependent approach will continue to be followed to determine the appropriate level and duration of the restriction.” This emphasis in the ECB’s decision text pointed to the importance of data such as inflation figures.
