U.S. CPI Inflation Falls to 4.9% in April; Bitcoin Rises Above $28K

The annual U.S. inflation rate slowed to 4.9% in April from 5.0% in March and versus economist forecasts for 5.0%, according to the Bureau of Labor Statistics' (BLS) Consumer Price Index (CPI) report Wednesday morning.

The price of bitcoin BTC$91,171.51 rose more than 1% to just above $28,000 in the minutes following the news.

For the month of April, the CPI rose 0.4% against expectations for 0.4% and versus 0.1% in March.

The core CPI – which strips out food and energy costs – rose 0.40% in April versus forecasts for 0.4% and March's 0.4% advance. The annual core CPI rate in April was 5.5% versus forecasts for 5.5% and March's 5.6%.

At its last meeting earlier in May, the U.S. Federal Reserve's Federal Open Market Committee (FOMC) indicated it's considering at least a pause in its historic run of rate increases that's seen the central bank take the benchmark fed funds rate from about 0% in early 2022 to the current targeted range of 5.0%-5.25%. While that fast pace of rate hikes hasn't succeeded in bringing inflation down to the Fed's 2% target, the central bank also has its eyes on the growing troubles in the U.S. banking system, which has led to the failure of a number of regional lenders, most recently First Republic Bank.

For the moment, traders are betting this morning's very modest moderation in inflation might give the Fed room for easier monetary policy. The U.S. 10-year Treasury yield has declined seven basis points to 3.45% and the 2-year nine basis points to 3.94%.