Alternative inflation data points to significant cooling in U.S. price pressures, potentially strengthening arguments for Federal Reserve interest rate reductions. Real-time data from Truflation indicates year-over-year CPI at 0.86% and core PCE at 1.38%, figures notably lower than official government reports. This dynamic, coupled with technical weakness in the U.S. Dollar Index, could influence broader financial conditions and risk assets like cryptocurrencies.
Alternative inflation data suggests a sharp cooling in U.S. prices, reinforcing the case for interest rate cuts. This carries broader implications for risk assets, including cryptocurrencies.
Real-time data from Truflation, an alternative inflation tracker, shows its U.S. CPI stood at 0.86% year over year as of a recent Sunday. Its reading of core PCE, the Fed’s preferred gauge, came in at 1.38%, well below the central bank’s 2% target.
“All our indexes are calculated daily as a year-over-year percentage rate, using millions of data points from tens of data providers,” Truflation stated. These figures contrast with official government data showing annual CPI at 2.7% in December.
The Fed’s interest rate trajectory has significant implications for the U.S. dollar and global liquidity. Rate cuts are widely viewed as a headwind for the dollar, a dynamic that has historically supported assets like Bitcoin.
Recent market signals suggest the U.S. dollar may be approaching a turning point. The U.S. Dollar Index recently posted a weekly close below a long-term support level that had held for more than a decade according to data.
Macro investor Raoul Pal has noted that “everyone needs and wants a weaker dollar to service their dollar debts.” Pal has also argued a softer dollar aligns with broader growth objectives as it eases financial conditions.
