Alternative inflation data is pointing to a sharp cooling in US prices, reinforcing the case for interest rate cuts and carrying broader implications for risk assets, including cryptocurrencies.
After the Federal Reserve paused rate cuts last week and signaled no clear path to near-term cuts, real-time inflation data suggest policymakers may be out of sync with rapidly improving price conditions.
Truflation, an alternative inflation tracker that aggregates millions of daily price points from tens of independent data providers, showed broad-based cooling across its US inflation indexes.
As of Sunday, Truflation’s US Consumer Price Index (CPI) stood at 0.86% year over year, down from 1.24% the previous day.
The platform’s reading of core personal consumption expenditures (PCE), the Fed’s preferred inflation gauge, came in at 1.38%, well below the central bank’s 2% target.
“All our indexes are calculated daily as a year-over-year percentage rate, using millions of data points from tens of data providers,” Truflation said Sunday.
The figures stand in sharp contrast to official government data, which showed annual CPI at 2.7% in December and core PCE at 2.8% in November.
As Cointelegraph recently reported, the Fed’s interest rate trajectory has significant implications for the US dollar, global liquidity conditions and financial markets. Rate cuts are widely viewed as a headwind for the dollar, a dynamic that has historically supported risk assets such as Bitcoin (BTC) and the broader crypto market.
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US dollar hangs in the balance
Recent market signals suggest the US dollar may be approaching a turning point, with technical and structural factors increasingly shaping its trajectory beyond Fed policy alone.
The US Dollar Index, which tracks the dollar’s performance against a basket of six major currencies, recently posted a weekly close below a long-term support level that had held for more than a decade, according to data from Barchart. The move could signal further downside risk if the breakdown is sustained.
Macro investors have long argued that a weaker dollar is not only tolerable but desirable under current conditions. Raoul Pal, founder of Real Vision, has previously noted that “everyone needs and wants a weaker dollar to service their dollar debts,” particularly in a global system heavily reliant on dollar-denominated liabilities.
Pal has also argued that a softer dollar aligns with the Trump administration’s broader growth objectives, including those tied to fiscal and industrial policy, as it tends to ease financial conditions and support global liquidity.
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