The PPI, or the Producer price index for August 2022, has just been released, and as expected, the data reveals a -0.1% MoM change in producer prices. For the last few days, most economists have also forecast that the estimated PPI will be around this range. At the same time, the core PPI revealed an MoM change of 0.4%, while most experts were betting it to be around 0.3%. It has brought into naught all expectations of a crypto rally.
The latest data release has acted positively on the crypto values to some extent but not as per the bulls’ expectations, expecting an even more positive performance.
The Relationship Between Inflation Data And Crypto Rally
The latest Consumer Price Index data, released yesterday, brought ill luck for the crypto sector as who ion figures revealed that the belief that inflation figures would be lower was wrong. The Reserve had already given an eerie warning that interest rates would be hiked. There will be more pain for the household and businesses alike.
The Fed Chair is already getting ready for a jumbo hike, and the chances of a 100-bps rise have surged to 48%.
In technical terms, the PPI or the Producer Price Index is defined as the variation in price the producers obtain for goods and services. The PPI is an important benchmark that helps the Fed deduce the following inflation data. However, the present PPI data is not enough for the Fed to change its hawkish stand, and as per @tedtalksmacro, a significant crypto influencer, the increase of inflation in PPI might even be the bigger deal.
The Fed authorities are asking for an aggressive stand to rein in the surging inflation. While the Cleveland Fed president Loretta Mester bats for bringing the interest rate over 400 targes, another member of the Minnesota Fed, a traditional dove, is in an even worse reincarnation,n a Volcker-esque stance. It is terrible news for the community who is expecting a crypto rally.