(TheLibertyRevolution.com)- The Biden administration is attempting to minimize the impact of the newest inflation statistics, which are expected to reveal that the cost of living in the United States increased in March, boosting recession worries.
The US Consumer Price Index (CPI) will be released on Tuesday and is forecast to show an increase of 8.3% year on year in March. The above-8% figure would be the first in at least four decades. The CPI measures the change in the prices of a basket of goods and services typically purchased by specific groups of households.
Core inflation, which excludes volatile food and energy costs, has climbed 6.6 percent year on year in March, up from 6.4 percent in February.
The gap between the two indicators, according to Jen Psaki, is due to an unusual surge in gas costs last month. Petrol prices were more than $1 over pre-invasion levels at times, so an approximately 25% spike in gas prices would influence [Tuesday’s] inflation reading.
The White House’s forecast of a significant increase in the headline CPI owing to the volatile food and energy component is likely intended to assuage market anxieties ahead of the report. Risk assets, including bitcoin (BTC), have been under pressure to the CPI announcement on expectations that a reading above 8% would enhance the argument for quicker Fed rate rises and balance sheet run-off.
Last week, Federal Reserve Governor Lael Brainard said that “\bringing inflation down is of paramount importance. According to the American Automobile Association, gas prices in the U.S. have pulled back to $4.11 per gallon from a record high. WTI crude traded at $96 per barrel at press time, down 23% from the high of $123 seen a month ago.
It will be interesting to observe if markets take the White House’s position into account and stay calm in the event of a CPI reading above 8%. Markets may revert to risk-on mode if expectations are significantly missed.
However, given the rising agreement that the era of low inflation and easy liquidity may be over, the judgment is still out on the returns of animal spirits in asset markets.
The Bank for International Settlements (BIS) has warned that the current high inflation environment could last. “We may be on the cusp of a new inflationary era,” BIS chief Agustín Carstens said earlier this month. He added that real interest rates are likely to rise above neutral levels for a time to moderate demand.