CPI Drops Below Forecast to 2.8% in February, Easing Inflation Concerns

Bitcoin Rallies Past $84K as U.S. Inflation Cools, Boosting Fed Rate Cut Hopes

U.S. inflation eased more than expected in February, strengthening the case for potential Federal Reserve rate cuts in the coming months.

The latest report from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) rose 0.2% in February, coming in below expectations of 0.3% and slowing from January’s 0.5% increase. On a yearly basis, headline CPI climbed 2.8%, slightly under the 2.9% forecast and down from 3.0% in January.

Core CPI, which strips out food and energy prices, also showed a slowdown. It rose 0.2% on the month, underperforming the 0.3% estimate and cooling from January’s 0.4% increase. Year-over-year, core inflation stood at 3.1%, lower than the 3.2% projection and easing from 3.3% in January.

Bitcoin and Stocks React Positively

Markets welcomed the softer inflation data, with Bitcoin (BTC) rising more than 1% to $84,100 shortly after the report’s release. The Nasdaq 100 futures also extended gains, climbing 1.5%, while bonds, gold, and the U.S. dollar remained relatively stable.

This comes after a challenging period for financial markets, including crypto, as concerns over tariffs and persistent inflation sparked sell-offs. The S&P 500 has dropped 10% in the past month, while Bitcoin saw a 30% plunge from its record $109,000 high in January, just ahead of President Trump’s inauguration.

Focus Shifts to Fed Policy and Upcoming Data

Before today’s inflation report, traders had been pricing in a 40% chance of a Fed rate cut in May and an 85% probability of at least one cut by June.

Investors will now turn their attention to Thursday’s Producer Price Index (PPI) report, which could reinforce or challenge the latest inflation trends, offering more insight into the Fed’s next move.