White House forecasts increase in CPI inflation for 2023 & 2024; Good news for Bitcoin price?
- The White House updated its forecast for CPI inflation from 3.0% to 3.3% for 2023 and 2.5% from 2.3% for 2024.
- Back in March, the White House stated that the 2.3% CPI-U target was consistent with the Federal Reserve’s 2.0% PCE target.
- Crypto has been observing favorable development from US lawmakers, with Congressman Patrick McHenry calling Bitcoin a "financial revolution."
The United States has been noting a cooldown in the Consumer Price Index (CPI) for a while now. And while expectations for a downturn in inflation have been expected from the central bank in the coming months, the government seems to be of a different opinion.
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White House ups CPI inflation forecast
The White House put out its forecast for the Consumer Price Index for all Urban Consumers (CPI-U) for the fourth quarter-over-fourth quarter earlier this March. Back then, the Biden administration was of the opinion that inflation for 2023 would stand at 3.0% while the same would come down to 2.3% in 2024.
However, following the recent banking crisis and the Federal Reserve raising the interest rate target to a 22-year high of 5.25% - 5.50%, their opinion seems to have changed. According to reports, the White House is now forecasting inflation to rise to 3.3% in 2023 and 2.5% in 2024.
The reason why this is concerning for the economy is that the 2.3 percent CPI-U inflation rate is said to be consistent with the Federal Reserve’s 2.0 Personal Consumption Expenditures (PCE) Price Index. Thus whether an increase in the CPI-U also means that the Federal Reserve would raise its PCE target is concerning.
Although time and again, the central bank has stated that it is committed to bringing down the inflation to its 2% target, the timeline it gave was for 2025. This leaves the 2024 target at a potentially higher rate than 2%.
Annual CPI for the month of July 2023 rose by 3% year on year, bringing it down from the peak of 9.1% in November 2022.
CPI inflation annual change
But while an increase in inflation could be dangerous for the US Dollar Index, it may prove to be beneficial for Bitcoin, which has been observing a lot of support of late.
Lawmakers in the country have been supporting the development of rules and regulations for the crypto market. As a matter of fact, earlier this week, the House Financial Services Committee passed the bill protecting right to self-custody Bitcoin and other cryptocurrencies. Cited as the “Keep Your Coins Act of 2023”, the bill prohibits Federal agencies from restricting people from using or holding crypto assets.
Furthemore, the positive sentiment is also reflected in the perspective of lawmakers beyond bills and regulations. An example of the same lies in US Congressman Patrick McHenry’s words who stated that Bitcoin is a "financial revolution., adding,
“Terms like cryptocurrency, blockchain technology, and the digital asset ecosystem are now part of the everyday lexicon for millions of Americans and people around the world… This is a software revolution and a financial revolution if done correctly.”
Bitcoin price recently has been struggling to sustain above the $30,000 mark after crashing in July, trading at $29,300 at the time of writing.
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Author
Aaryamann Shrivastava
FXStreet
Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.
