The US market eagerly awaits the second inflation report of 2025, with analysts predicting a slight drop in both headline and core inflation.
US Inflation Expectations for February
In January 2025, the core inflation rate rose from 3.2% to 3.3%. The consensus is that the rate will drop to 3.2% in February. TEForecast expects a sharp decline to 3.1%. The overall US inflation rate is also expected to drop from 3% to 2.9%.
Market Confidence in Inflation Cooling
Markets are optimistic about a decrease in inflation. Kalshi traders predict a decline in headline CPI to 2.9%. Previously, Kalshi has accurately predicted 6 of the last 8 CPI figures.
Impact of Trump’s Trade Policies on Inflation
President Donald Trump recently imposed import tariffs on China, Canada, and Mexico, spurring retaliatory measures and bringing the global economy to the brink of a trade war. The upcoming inflation report will reflect the impact of Trump's aggressive trade policies.
Should predictions hold, the impact on the cryptocurrency market could be significant, as lower inflation may lead the Fed to ease monetary policy. However, the uncertainty surrounding trade policies might lead to volatility.
