What to Expect as U.S. CPI Data Release Looms

Key Insights:

• Economists are expecting the CPI data to accelerate from the 2.7% seen in June to 2.8% in July.
• A low CPI may pressure the Federal Reserve to cut interest rates in line with the White House request.
• Crypto analysts believe the Bitcoin price will rally higher after the CPI data release.

The U.S. Consumer Price Index (CPI) data is due for release today, August 12, 2025. This data is billed for release as the crypto markets started the week on a strong footing.

Bitcoin (BTC) reclaimed the $120,000 level after several failed attempts. Ethereum took a similar route, reaching a new high of $4,352.

All eyes are on the July CPI numbers. A softer CPI rate could fuel rate cut bets and send cryptocurrencies flying. In contrast, a higher-than-expected record might trigger a pullback for cryptocurrencies, particularly Bitcoin.

Market Forecasts on July CPI Data

The CPI is an important measure of inflation as experienced by consumers. The July US CPI report will drop at 2:30 PM on August 12. Economists expect the CPI to accelerate in July, as tariffs push up consumer prices.

Economists surveyed by Dow Jones Newswires and The Wall Street Journal expect the CPI to rise 2.8% in July, up from a 2.7% annual increase in June.

Additionally, core inflation, which excludes the volatile prices for food and energy, is expected to accelerate to a 3.1% annual increase in July. This would be its highest since February, up from 2.9% in June.

A CPI report matching expectations would indicate that President Donald Trump’s trade wars are squeezing household budgets.

Economists and officials at the Federal Reserve have closely watched “core” inflation measures.

The goal is to help answer whether tariffs will cause a short-lived price increase or whether high inflation will set in.

The Fed manages the US monetary policy to keep core inflation at a 2% annual rate. Rather than CPI, the Fed uses a different inflation measure, PCE, as its benchmark. However, the two inflation gauges tend to move in the same direction.

Is an Interest Rate Cut in View?

Federal Reserve Chair Jerome Powell has been firm in his opposition to reducing interest rates. Fed officials have kept the rates between 4.25% to 4.50% all year, partly due to concerns that tariffs could stoke inflation.

However, the Fed is under pressure to cut interest rates to boost the economy and prevent a severe increase in unemployment.

The Fed faces a dilemma of either cutting rates at the risk of reigniting inflation or keeping them high. If the Central bank decides on the latter, it risks dragging the economy into a recession.

Financial markets have placed bets that the Fed will deliver the first rate cut of the year in September. Polymarket traders even bets on a 76% odds of a 25 bps Fed rate cut in September.

As analyst Crypto Rover pointed out, the odds of a rate cut can even soar as high as 84.5%.

The Tuesday CPI report may determine the decision of the Fed regarding interest rate cuts. Accelerating inflation could pressure the Fed to keep its key interest rate high until its policy committee meets in September.

However, investors will likely price more rate cuts if inflation does not stand in the way after the July CPI data.

The Fed has been clear that tariff uncertainty is its main concern about cutting rates. Removing this concern means the Fed could move more aggressively.

Implications for Bitcoin

The crypto market has shown mild volatility ahead of today’s CPI release. The volatility comes as markets increasingly worry about the prospects for the US economy.

For Bitcoin, the recent Trump tariffs present a double-edged sword. If inflation remains high, the Bitcoin price may gain more appeal as a hedge.  However, if markets continue to panic, BTC may sell off alongside other risk assets.

At press time, BTC is priced at $118,445, down 2.3% over the past 24 hours. Onchain analyst, Ali Martinez, has offered an intriguing insight into the BTC price.

Martinez noted that when BTC dips ahead of CPI or PPI reports, it often rallies right after the data drops, and vice versa.

If this dynamics holds in the current cycle, Bitcoin price could reclaim its previous all-time high or even chart new levels.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.