Today was the day we got our CPI report. This number came in today at 3.3% which is flat from last month. Now remember the target is 2.0% or less for inflation number and the CPI doesn't count a lot of other things that have seen skyrocketing inflation. However the CPI number is still going to be the main one people look at and talk about because it's what's covered in main stream media.
That being said yester I talked a bit about the next 6 months for crypto which targeted the Fed rate. You can read about that more here What the next 6 months could look like for crypto
Even though we are seeing prices and normal cost of living spike the general economy is starting to come into a semi stagnation where the GDP is starting to slow down. Normally this is the case of the start of what could turn into a recession of not kept in check. However there's a big balancing act that happens with it all. In reality we could continue to see record high inflation no matter what simply because the US debt is simply massive with no end in sight in terms of growing and with two major competitions to it the BRICS and Crypto.
Overall what this means and why we are seeing the stock market rally today and also the crypto markets rally is because if the fed does cut rates it's going to send crypto and the stock market into an absolute tear in a good way.
This is mainly because crypto has been holding rather steady for a long time now showing a solid point of value and simply waiting for the right conditions to explode.
It's also been said that crypto would see at least $100,000 by years end by many people and that might be the case. There's also increased pressure from the white house to do something to turn the mess around and make them look better for when election season comes here in November.
Personally I think the Fed needs to keep rates at the current levels for the rest of the year to really start to curb the inflation. It's also beneficial to the USA to have this higher fed rate as well as banks, money mangers, insurance companies and more.
However we also have to keep history in mind here. Whenever the fed starts to cut rates too early we end up having ourselves a recession and depended on when that rate cut happens in terms of how soon also determines how long the recession lasts.
The pressure for sure is on now for a lower rate as other countries around the world are starting to see their rates lower as well.
For example if we pull the CPI report the red line shows ALL inflation and the blue line shows electricity inflation. As you can see while the CPI number is staying flat other areas deemed necessary to live and not counted in are seeing massive spikes.
What are you thoughts? We will see a rate cut in the next two months?