On June 11, 2025, the May Consumer Price Index was released.
Inflation is 2.4% (up 0.1%), which is below the predicted rate of 2.5%. Again, the U.S. officials are calling for interstate rates to be cut. How realistic is that call, and will crypto charts respond to May’s CPI?
Table of Contents
New data
The Bureau of Labor Statistics reported a May CPI rate of 2.4%, 0.1 percentage points down from April’s 0.2% inflation growth. It reveals that inflation continues to grow, albeit at a slower pace. It is the lowest yearly growth since February 2021. Economists had predicted a 0.2% increase, so the CPI news was generally met as a “no inflation” signal.
The core basis, which doesn’t factor in volatile prices for food and energy, is in line with April’s 2.8%.
Trump-Powell standoff and tariffs
Tariffs deployed and then frozen for 90 days by Donald Trump have been seen as a factor that would drive the inflation rate up. However, the inflation turned out to be mild. The Federal Reserve’s Chair Jerome Powell and his colleagues have repeatedly said that the Fed is not in a hurry to cut rates and will rather monitor the situation to decide if action is required.
Trump is publicly pressuring Powell, calling him names and referencing the recent European Central Bank rate cuts as a sign of Powell’s supposed error. On social media, Trump supporters allege that Trump will fire Powell. However, it is unlikely to happen, as the Fed is an independent agency with its own agenda, and the President of the United States has no power to fire the Fed chair. The U.S. Treasury head, Scott Bessent, is named as a possible successor to Powell. While keeping inflation in check is the Fed’s job, Bessent stated that the inflation is low “due to Trump.”
The primary objectives of the Fed are to keep inflation and unemployment rates in check. The agency does not have much leverage to influence these processes: it may cut or increase interest rates or print money.
Following the COVID-19-induced inflation spike, the Fed is working diligently to return the U.S. inflation rate to its pre-COVID level of 2% or below. Generally, the Fed has been doing its job well. It raised interest rates in 2023 and managed to bring inflation from over 7% rate to 2.3% in April of 2025.
Trump is repeating that decreasing inflation is a good reason to cut interest rates to stimulate the economy, as it would weaken the USD, encouraging foreign countries to buy U.S. goods even amid a tariff spike.
From the Fed’s standpoint, inflation remains above the level the agency aims to achieve, while tariffs are a factor that makes the Fed even more cautious, as it doesn’t want to undo all the progress made in the last five years.
It’s especially notable that calling the Fed for interest cuts now, when inflation is up, not down, contradicts what the Fed stands for. Therefore, had the Fed cut the rates now, it would have been inconsistent given the Fed’s previous actions. Thus, rate cuts are unlikely. Furthermore, some believe that tariffs will eventually lead to increased inflation.
Meaning for the crypto market
Bitcoin has established itself as a hedge against inflation. This time around, the CPI signal is ambiguous. If we look closely at how different people react to it, we may see the full spectrum. While some view the inflation spike and fear stronger spikes as the tariffs take effect (when the 90-day pause ends), others celebrate the “low” or even “no” inflation, as it turned out to be below expectations.
Given the lack of unity in the reaction to the news and the overall uncertainty, the new CPI data will likely have a minimal impact on the crypto market. One possibility, however, is that the Fed may start printing money if it decides that interest rates are too high, even though it’s still early to cut them. If it happens, investors will flock to Bitcoin and gold.
The money-printer-goes-brrr situation is not impossible. In April 2025, Fed official Neel Kashkari admitted that the agency has the tools to impact the state of the economy, and many believed he was referring to printing more fiat money.