At 2.9 percent, US inflation softened enough to revive rate‑cut bets and jolt markets from bonds to Bitcoin. The figure, shared widely by market accounts on X, landed alongside fresh guidance from Morgan Stanley pointing to three 25‑basis‑point cuts in 2025, sharpening the focus on the Federal Reserve’s path as growth and prices cool.
The rate picture is moving quickly. Morgan Stanley revised its outlook to anticipate 25 bps reductions at all three remaining policy meetings in 2025, a shift from earlier expectations of cuts later in the year, and signaled another trio of quarter‑point moves in 2026 (January, April, July). In parallel, separate data on housing finance showed mortgage rates sliding to 6.35 percent, the lowest since October 2024, easing pressure on rate‑sensitive households.
What 2.9% US inflation means for rates and risk assets
A 2.9 percent consumer price index reading keeps the disinflation trend intact while leaving room for cautious easing. If the Fed judges labor conditions to be rebalancing and inflation expectations anchored, front‑loaded cuts would be consistent with returning policy toward neutral without reigniting price pressures. That is the scenario many rate‑sensitive assets have started to price.
In crypto, liquidity expectations often move ahead of policy decisions. Bitcoin (BTC) tends to respond to declining real yields and a softer dollar, while Ethereum (ETH) historically benefits when risk appetite broadens beyond BTC. On X, several high‑follower accounts flagged a bid in majors and strength in altcoins as rate odds shifted, though intraday moves remained volatile around options expiries.
How US inflation at 2.9% changes crypto liquidity math
Lower expected policy rates reduce term premia across fixed income, lowering the hurdle rate for growth assets and speculative projects. For exchanges and on‑chain lenders, cheaper capital can expand market‑making inventories, tighten spreads, and improve depth. For stablecoin issuers, falling Treasury yields compress interest income, which can reduce excess profits but also incentivize new product design tied to tokenized bills and money funds.
There are still caveats. Core CPI dynamics matter more for policy than headline, and shelter disinflation is uneven across regions. If services inflation proves sticky, the path of cuts could slow. And any upside shock in energy could quickly feed through to headline and expectations, re‑steepening curves and tightening financial conditions again.
- Headline CPI printed 2.9 percent year over year, per widely circulated market posts.
- Morgan Stanley now projects three 25 bps cuts in 2025 and three more in 2026.
- U.S. 30‑year fixed mortgage rates fell to 6.35 percent, the lowest since October 2024.
- Crypto traders highlighted stronger flows into BTC and large‑cap alts amid softer rate odds.
- Volatility risks persist around options expiries and data surprises.
US inflation and the evolving 2025–2026 policy path
The latest bank forecasts reflect a delicate balancing act: cut enough to prevent an unnecessary rise in unemployment, but not so fast that the Fed risks an inflation resurgence. The shift from a “later and fewer” to a “sooner and more even” cadence underscores how each data print can reshape the SEP path and the eventual terminal level for this cycle.
Markets will look for confirmation in the next two jobs reports, updates to inflation expectations, and revisions to growth. If realized, a three‑cut 2025 would bring the policy rate closer to neutral by year‑end, easing real rate pressure on duration and growth equity multiples. In digital assets, that usually coincides with improved funding conditions for builders and a broader base of spot demand.
US inflation at 2.9% and cross‑asset signals to watch
Keep an eye on breakeven inflation, high‑yield spreads, and the trade‑weighted dollar. A gradual drift lower in real yields without widening credit spreads is the most favorable backdrop for risk assets. Conversely, a stronger dollar would tighten global USD liquidity, which has historically weighed on non‑USD crypto performance and emerging‑market flows.
The near‑term calendar is crowded: central‑bank speeches, PCE later in the month, and the next CPI. Each will test whether 2.9 percent was a waypoint on the glide path to target or a stall. For now, markets have a clearer narrative to trade against, and positioning is adjusting accordingly.
Looking ahead, the Fed’s communication around pace and conditionality will be as important as the cuts themselves. If the committee pairs a measured easing path with data‑dependent language, risk assets could sustain a constructive tone. If not, choppiness returns. Either way, US inflation will anchor the debate into year‑end—does this glide path hold?
