US Inflation Reaches 3.7%, Bitcoin and Gold Prices Decline

WHY IT MATTERS

Inflation measures how quickly prices for everyday goods and services are rising. The Consumer Price Index, or CPI, is one of the most closely watched ways to measure inflation in the US. When inflation is higher than expected, the Federal Reserve — the institution that manages US monetary policy — may decide to raise interest rates to slow spending and bring prices down. Think of interest rates like the price of borrowing money: when they go up, borrowing becomes more expensive, which tends to slow economic activity. For crypto, this matters because higher interest rates can make safer investments like government bonds more appealing compared to riskier or non-yield-bearing assets like Bitcoin. This is why crypto prices often react to inflation data and Federal Reserve decisions.