US Inflation Edges Higher to 2.4% in May: Trump Urges 100bps Fed Cut, Bitcoin Stays Resilient

The US Consumer Price Index (CPI) for May 2025 was released on June 11, showing an annual inflation rate of 2.4%, slightly below the anticipated 2.5%.

Polymarket shows a high probability that the Federal Reserve will maintain interest rates unchanged this month. This development has intensified political pressure, with President Donald Trump urging the Federal Reserve to cut interest rates by 100 basis points and Vice President JD Vance criticizing the Fed's refusal to lower rates as "monetary malpractice."

The market response has been mixed, with traditional financial markets showing caution, while the cryptocurrency sector, particularly Bitcoin, has held firm amidst a backdrop of positive developments including a US-China trade deal and regulatory advancements.

Trump and Vance Demand Fed Rate Cuts After CPI

The Bureau of Labor Statistics (BLS) reported that the CPI increased by just 0.1% month-over-month in May, resulting in a year-over-year rise of 2.4%, compared to the expected 2.5%. Core CPI, which excludes volatile food and energy prices, remained steady at 2.8% annually, still above the Federal Reserve's 2% target but in line with expectations.

President Trump seized on the data, posting on social media, "CPI JUST OUT. GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT. WOULD PAY MUCH LESS INTEREST ON DEBT COMING DUE. SO IMPORTANT!!!". His call for a full percentage point reduction in interest rates reflects his ongoing critique of Fed Chair Jerome Powell's monetary policy, with Vice President JD Vance reiterating Trump's stance, stating on X that the Fed's refusal to lower rates is "monetary malpractice"

Market Reactions and Broader Context

The market's response to May 2025 US CPI data, which has been below expectations for the fourth consecutive month, has been predominantly positive, particularly within the cryptocurrency sector.

Bitcoin has held firm, with its price stabilizing as investors interpret the softer inflation figures as a potential catalyst for Federal Reserve rate cuts. This optimism is further fueled by the successful conclusion of US-China tariff negotiations in London, which has alleviated concerns about escalating trade tensions and bolstered market confidence.

Additional positive developments have contributed to this bullish sentiment. The SEC has recently advanced its review of ETFs and expressed a favorable stance towards DeFi, signaling regulatory support for innovative financial products.

Moreover, a public dispute between Elon Musk and President Trump, which has shown signs of easing, with Musk expressing regret for some of his previous posts about Trump and deleting several related comments from last week. This has been interpreted as a reduction in political uncertainty, further enhancing market confidence.

These events, combined with the CPI data, have collectively pushed market sentiment towards anticipating a bull market, with investors increasingly optimistic about future economic and regulatory developments.

Speculation on Fed Rate Cuts in June and Beyond

With the May 2025 CPI data coming in below expectations for the fourth month in a row, speculation has intensified about whether the Federal Reserve might consider a rate cut, despite initial predictions leaning towards stability.

Polymarket data indicates a 98% probability that the Fed will maintain rates unchanged at its June 18, 2025, meeting. This high confidence in no immediate action may reflect the Fed's cautious approach, awaiting more consistent data trends or a clearer economic outlook.

Despite this, the combination of lower inflation, successful US-China trade negotiations, and political pressure from Trump and Vance could shift the narrative. Some market observers suggest that a rate cut might be deferred to July or September 2025, particularly if additional economic indicators, such as employment data or further tariff impacts, reinforce the case for monetary easing.

The ongoing political push for a 100 basis point cut, as voiced by Trump, adds further complexity. If the Fed resists in June, the pressure may escalate, potentially influencing a more aggressive stance in subsequent meetings. For now, the market's bullish momentum, driven by cryptocurrency resilience and regulatory optimism, may sustain itself, but the timing of any Fed action remains a critical watchpoint for investors.