Inflation in the U.S. is slowing significantly in November, falling well below expectations, and this situation could reshape the short-term outlook for the market and the U.S. Federal Reserve (Fed). According to current data released on December 18, the headline Consumer Price Index (CPI) increased by only 2.7% on an annual basis. This rate is well below the market expectation of 3.1%.
On the other hand, the core CPI excluding food and energy showed an annual increase of 2.6% and fell short of the expected 3.0%. These data indicate a clear slowdown in price pressures and that the disinflation process is gaining momentum. Especially as we move towards the end of 2025, this momentum seems to be maintained.
Is this a bullish signal for the Cryptocurrency Market?
The lower-than-expected inflation strengthens the view that inflation has cooled more quickly in recent weeks than policymakers and markets had predicted. The core inflation closely monitored by the Fed has now fallen well below 3%. This level was the last point seen before inflation picked up again earlier in the year.
This data weakens the view that tight monetary policy needs to continue for a long time while strengthening the expectation that the Fed may turn to easing policy earlier than expected.
It is likely that the markets will interpret this data as supportive for interest rate cuts. Expectations for early 2026 could be reshaped. Low inflation creates a relaxing environment for risky assets, putting pressure on real interest rates and the US dollar in recent months.
Risky assets in the market; stocks and the cryptocurrency market had taken a cautious position before the announcement. This indicates that there is room for a rapid price change among traders after the data.
Bitcoin and the overall cryptocurrency market were in a price stagnation mode while the CPI was announced, and traders were prepared for volatility. Lower-than-expected inflation creates a macro-level favorable wind for crypto. Because falling inflation expectations increase liquidity conditions and risk appetite.
In the short term, price movements will be determined by how quickly markets price in Fed policy expectations and whether new purchases will come after the initial reaction.
So, what's next? Eyes will be turned here:
Updated probabilities of Fed interest rate cuts
Response of US Treasury bond yields
Whether the dollar strengthens or not
Volatility in risky assets until the end of the year
For now, the November CPI report says this: inflation has cooled faster than expected, and markets will have to adapt quickly.
