One of the biggest developments of the week revolved around the economic indicators from the United States, featuring reports on employment and inflation. Last week’s employment report was followed by an inflation report that provides insights into the current economic climate. In 2025’s last quarter, the Federal Reserve implemented three rate cuts due to weakening employment and stable inflation. So, what is the current state of affairs?
U.S. Inflation Report
Last week’s employment data indicated that the situation has not worsened, which previously set a barrier to further rate cuts. Now, with the arrival of the inflation report, the Federal Reserve remains bound by data-driven decisions. The employment decline that mandated rate cuts last year appears to have halted for now.
However, a significant issue emerged as Fed Chair Powell publicly stated on Monday that he felt pressured by then-President Trump to cut rates instead of relying on data-driven decisions. Powell even suggested that failure to comply might result in imprisonment. Meanwhile, the Department of Justice is investigating claims of cost inflation in Fed building renovations, a situation Powell attributes to not reducing rates at the pace Trump desired. JPMorgan’s Chief Financial Officer remarked, “The loss of Fed’s independence tends to lead to steeper yield curves and harm economic dynamism.”
Delving into the inflation report, the figures are as follows:
- Consumer Price Index (CPI) Announced: 2.7% (Expectation and Previous: 2.7%)
- Core CPI Announced: 2.6% (Expectation: 2.7%, Previous: 2.6%)
The report’s figures being in line with expectations confirms the positive data from last month. While monthly CPI remains at 0.3%, aligning with forecasts, the core CPI surpassed expectations slightly. Although CPI has stayed above the 2% target for a long time, recent marginal weakening is seen positively. Nevertheless, the mild inflation change is insufficient to justify rate reductions as employment recovery continues, thus preventing a major positive market outcome.
Bitcoin experienced an approximate $300 increase.
