US inflation reached 7% in December as prices rise at rates unseen in decades

[bitmover]

US inflation reached 7% in December as prices rise at rates unseen in decades

US labor department says CPI rose 0.5% compared with November and 7% compared with December 2020
...
The news represents a blow to the Biden administration and the Federal Reserve, which until recently have characterized soaring prices as a “transitory” phenomenon brought about by supply chain issues triggered by the pandemic.
...
“What we have now is a mismatch between demand and supply. We have a very strong demand in areas where supply is constrained,” Powell said.

“If we see inflation persisting at high levels longer than expected [and] we have to raise interest rates more over time, we will.”

https://www.theguardian.com/business/2022/jan/12/us-inflation-rate-december-2021

It will be crazy to see United States raising interest rates. While a lot of European countries have low or negative rates, soon USA will have their interest rates climbing.
European countries will have to follow that as well, as Euro zone already has about 5% inflation.

I think high inflation rate is good for bitcoin. But high interest rates is not good for bitcoin price, as investors will move their money to bonds and treasuries which will be paying more than before

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[adaseb]

Bitcoin took the news very well only to fall back later when the SPX started to trend lower. Since we are at 7.5%, many are expecting the faster rate hike in history. Bullard is calling for 1% increase by July so in March we will most likely see the first increase of 0.5%.

If you look at previous history of high inflation followed by increased rates you will see that the stock market in the long term still went upwards. And if the stock market goes up or trades sideways so will Bitcoin and crypto since they got a close correlation.

[Vaskiy]

The year 1980 was recorded to be the highest of inflation in the history of USA. The inflation rate of 13.5% which is quite high and the reason behind was mentioned as the Iranian revolution. By the time the oil supply got disrupted leading to sharp rise in the price of oil. Most of the countries suffered the recession. This led to the increase of interest rates and it caused stagflation where the interest rates are high with high rate of unemployment. What is the key reason behind the upcoming inflation. This time we can expect similar things to happen.

When there is hard inflation automatically the entire market will crash. Surely this will have its impact over bitcoin even though it is independent.

[odolvlobo]

But high interest rates is not good for bitcoin price, as investors will move their money to bonds and treasuries which will be paying more than before

I guess you should sell your bitcoins then.

[Poker Player]

I've recently heard Mark Moss, using the term CPLIE, which I think paints a closer picture to reality.

The CPI has been changed over the decades so as not to shock people too much, just as the current 7% CPI calculation has been done with cherry-picking, using a 0.5% increase for rents, for example, when it is much higher, so as not to shock people, because real inflation is higher.

This is the only thing we have to worry about. If 7% is recognized, we are in a very bad way.

[bitmover]

But high interest rates is not good for bitcoin price, as investors will move their money to bonds and treasuries which will be paying more than before

I guess you should sell your bitcoins then.

I am talking about a clear short term movement.
I am holding for long term.

I am selling some Satoshis every month when we are above $ 50-55k, but not significant amount of my stash.

[stompix]

It will be crazy to see United States raising interest rates. While a lot of European countries have low or negative rates, soon USA will have their interest rates climbing.
European countries will have to follow that as well, as Euro zone already has about 5% inflation.

I think they are still waiting for the fuel prices to stabilize before making any serious changes.
The only countries I've read to date about a hike in interest rate are Romania but they are not in the eurozone and they had a higher rate even before the pandemic, and the Czech Republic which is almost in the same scenario, with even higher interest rates but with a lower inflation rate on the horizon.

Right now the biggest influence in inflation is caused here not but money printing but by record oil and gas prices, with higher than usual temperatures, I'm reading 6C on my app while last year it was between -5°/-12° so gas will go down, the oil will surely also go down in spring once the US and Canada completely restart mining activities so part of the problem will be solved.
I doubt both the ECB and national central banks will act prior to Q2/3.

 
 

[Hydrogen]

It will be crazy to see United States raising interest rates. While a lot of European countries have low or negative rates, soon USA will have their interest rates climbing.

I think the fed has wanted to raise rates for years.

Fed needs to keep raising U.S. rates to prevent overheating: Williams

APRIL 6, 2018

SANTA ROSA, Calif. (Reuters) - The Federal Reserve needs to keep raising U.S. interest rates gradually to keep the economy, already growing faster than its trend rate, from getting too hot, an influential U.S. central banker said on Friday.

https://www.reuters.com/article/us-usa-fed-williams-idUSKCN1HD2R2

Above we can see they proposed raising rates 4 years ago.

It would appear whatever motive they have for raising rates has existed for awhile now.

[lixer]

I think they are still waiting for the fuel prices to stabilize before making any serious changes.
The only countries I've read to date about a hike in interest rate are Romania but they are not in the eurozone and they had a higher rate even before the pandemic, and the Czech Republic which is almost in the same scenario, with even higher interest rates but with a lower inflation rate on the horizon.

Right now the biggest influence in inflation is caused here not but money printing but by record oil and gas prices, with higher than usual temperatures, I'm reading 6C on my app while last year it was between -5°/-12° so gas will go down, the oil will surely also go down in spring once the US and Canada completely restart mining activities so part of the problem will be solved.
I doubt both the ECB and national central banks will act prior to Q2/3.

Energy and fuel prices have gone insanely high this year, which is a big problem considering how we are already lacking a lot of proper clean energy so people are getting even dirtier and dirtier energy just to it would go down.

I am afraid that it was already too late for renewable energy, if we had a lot more nuclear, hydro, wind and solar energy all built up, then we wouldn't need any of this, prices of starting one and even storing is insanely high COMPARED to what we used to pay, now looking at the situation, if we spent that money like 10-15 years ago and lost a huge chunk of money and then had a big problem, I could totally see it paying itself already by this time and it would be basically like free right now, not free of course to customer but the initial cost would have been gone.

[Leviathan.007]

Yes the USA is suffering from the inflation rate but I think that's more than just seven percent we all the government will announce some inflation rate but the real inflation rate in the USA can be even more and worst than this, we are still in the first quarter of the year but I don't think we will see any reaction from the government regarding this to do some improve even after the second quarter of the year, this situation can make people set more demand on the financial markets to stay away from the inflation rate and surly bitcoin market can be one of these markets.

[magneto]

I feel like that bitcoin is one of the few assets that will outperform during the impending market correction in stocks and real estate.

Stocks and real estate will absolutely get crushed by interest rate hikes in response to increasing inflation, simply because of the fact that their value is derived from discounted values of future cash flows.

Bitcoin is totally different in the sense that its value comes from its intrinsic and programmed scarcity and not future cash flows. I think that if inflows into BTC due to inflation fears outweigh the money pulled out due to higher interest rates, which is probable, then we will see another rally.

[Gyfts]

...

Oil and gas is only part of it. You could omit the entire energy industry and inflation is still out of control. Supply chain issues are part of the problem, but so is the fact that most governments closed their economies off almost entirely and then began artificially stimulating it through endless printing. The issue is much worse than scarcity of products -- ramp up energy production to fix energy shortages. Money supply doesn't work that way. Once money begins circulating into the economy, you can't just remove it without major hurdles unless you plan on siphoning out funds from people's bank accounts.

[davis196]

The US Federal Reserve has to be very careful when raising the interest rates,because having too high interest rates will make repaying the government debt really expensive and difficult.
That's why I think that Federal Reserve will increase the interest rates just a little bit.Nothing too extreme.
The institutional investors,who are usually buying government bonds are most likely not interested in Bitcoin,since they want a lower risk/reward ratio.
The Bitcoin investors are more aggressive and risk seeking.

[takngantuk]

I think high inflation rate is good for bitcoin. But high interest rates is not good for bitcoin price, as investors will move their money to bonds and treasuries which will be paying more than before

yes you are right, rising interest rates will trigger the crypto market. the question now is, will the crypto market survive? this is what i kept thinking the last few days. when viewed from this morning's chart, the worst could happen.

[stompix]

...

Oil and gas is only part of it. You could omit the entire energy industry and inflation is still out of control. Supply chain issues are part of the problem, but so is the fact that most governments closed their economies off almost entirely and then began artificially stimulating it through endless printing.

Oil and gas determine almost everything.

Back in October, I was talking about fertilizer prices, urea  (UHP) is up 150% from last September, this is because of gas, greenhouse heating for vegetables that should complete early spring are triple, cost with transportation will be up at least 15% per km around here. Everything from tomatoes to meat to eggs to wheat will be more expensive only because of gas and oil. These are not affected by supply chains issues, we had none last autumn and winter and we will probably have none except some machine parts we've waited weeks to come from the US last year. But that's just a tiny thing.
Just an example of how serious this is:
Bread, you need wheat (more expensive because of fertilizer made with gas, diesel), you need to grind that to flour (electricity), you need to transport it (gasoline), you need to cook it (gas or electricity depending on the oven), you need to transport it (gasoline).

Once electricity goes up you have a rise in costs for everything, combine that with gas and diesel fuel and there is simply nothing escaping it.

[Silberman]

The year 1980 was recorded to be the highest of inflation in the history of USA. The inflation rate of 13.5% which is quite high and the reason behind was mentioned as the Iranian revolution. By the time the oil supply got disrupted leading to sharp rise in the price of oil. Most of the countries suffered the recession. This led to the increase of interest rates and it caused stagflation where the interest rates are high with high rate of unemployment. What is the key reason behind the upcoming inflation. This time we can expect similar things to happen.

When there is hard inflation automatically the entire market will crash. Surely this will have its impact over bitcoin even though it is independent.

And something that also happened back then was the price of gold growing up at an incredible speed as well, so if we see something similar to what we saw back then I think it is a given that assets that are considered to be a store of value are going to do the same as they did back then, so I think we can expect that bitcoin performs great under those circumstances as people try to do something to protect themselves from the mistakes their elected governments have committed regarding their fiat currency.