U.S. Inflation Expectations Drop 1.5% in June

Inflation expectations in the U.S. have experienced a significant decline in June, as reported by Joanne Hsu from the University of Michigan. This decrease is largely attributed to a reduction in consumer concerns over the impact of tariffs on future inflation. The year-ahead inflation expectations dropped from 6.6% in May to 5.1% in June, marking a notable shift in economic sentiment. This decline suggests that there may be less pressure for monetary tightening, which could be favorable for various markets.

Despite the easing of inflation expectations, the figures remain higher than the forecasts for the later parts of 2024. This indicates that there are still underlying concerns regarding the effects of trade policy on inflation. The long-run inflation expectations also fell for the second consecutive month, from 4.2% in May to 4.1% in June. These readings are the lowest in three months, reflecting a softening of consumer fears about the potential impact of tariffs on future inflation.

Historically, shifts in inflation expectations have had an impact on Bitcoin and other cryptocurrencies. Lower inflation projections typically ease monetary policy pressures, which can support risk assets like Bitcoin. However, as of the latest reports, there have been no immediate shifts noted in the crypto market due to the change in inflation expectations. This suggests that the market impact on crypto remains indirect, with potential long-term implications rather than immediate reactions.