- U.S. inflation cooled to 2.8% in February 2025, down from 3% in January 2025.
- This decrease is a result of lower housing costs, groceries, gas prices, and airfares.
- The core inflation rate remained at 3.1%, suggesting persistent price pressures.
The U.S. inflation cooled down more than expected for the first time in five months in February 2025. According to a report by the Bureau of Labor Statistics, the inflation rate stood at 2.8%, a 0.2% decrease from January’s 3% rate. This cooling down was driven by lowering price pressures in products such as groceries, housing costs, airfares and even gas prices. However, there are concerns that President Donald Trump’s tariff policies could disrupt the progress. Further, the core inflation, which excludes food and energy, remained at 3.1%, signaling a lingering price pressure.
In response to these inflation figures, US stock markets exhibited volatility. The Nasdaq Composite initially surged by 2.1% before closing 1.2% higher, while the S&P 500 added 0.5%. However, President Donald Trump’s 25% tariffs on all steel and aluminum prompted immediate retaliation from Canada and the European Union. The events raise concerns about the potential trade wars and their impact on the economy.
Despite the cooling inflation, the Federal Reserve decided to keep interest rates steady at 4.25% to 4.5% during its March 18-19 FOMC meeting. Fed Chair Jerome Powell emphasized that while inflation is moving in the right direction, the Fed is in no rush to cut rates. He also noted that new tariffs could introduce additional inflationary pressures, adding uncertainty to future rate decisions.
Beyond inflation concerns, the crypto industry is closely watching upcoming regulatory developments. On March 27, 2025, the Senate Banking Committee will hold hearings for the SEC nominee, Paul Atkins, and the Comptroller of Currency nominee, Jonathan Gould. The Office of the Comptroller of the Currency (OCC) oversees U.S. national banks and plays a key role in determining whether crypto companies can access traditional financial services.
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Notably, the crypto industry has long faced challenges in securing banking relationships due to regulatory hurdles. If Gould leads the OCC, it is expected to push for clearer stablecoin regulations and greater integration of digital assets into the banking system. Additionally, Atkins at the SEC may push for clearer and more favorable crypto regulations, potentially easing restrictions on digital assets, exchanges, and token offerings.
While inflation continues to decline, economic uncertainty remains, especially with potential tariff-related price increases. If tariffs drive up costs and tighten monetary policies, it could lead to higher expenses, economic instability, and, most importantly, market volatility for cryptocurrencies, influencing regulatory and investor sentiment.
