Although the data-collection period for Wednesday's PPI reading barely overlapped with the initial moments of the U.S.-Israel war with Iran, which broke out on Feb. 28, the rise in prices for producers is likely to bolster inflation concerns that stem from elevated energy prices, according to Carlos Guzman, a research analyst at crypto trading firm GSR.
The Federal Reserve’s framework for monetary policy typically “looks through” temporary energy shocks. However, Guzman told Decrypt that the central bank may be forced to keep interest rates higher for longer if energy costs remain elevated for a prolonged period of time.
“That could overall be bad for crypto,” he said, given that lower interest rates generally incentivize investors to shift capital toward riskier assets. “I think the past few weeks since the war started have been pretty surprising, because we’ve seen crypto perform well.”
On Wednesday, the S&P 500 fell 0.4%, outpacing the tech-heavy Nasdaq’s 0.3% decline, while the Dow Jones Industrial Average tumbled by 300 points.
