President Donald Trump said he 'loves' inflation Wednesday, hours after government data showed consumer prices climbing at the fastest annual clip in three years. The Consumer Price Index rose 4.2% from a year ago, driven largely by surging energy costs. The remarks land exactly one week before the Federal Reserve’s June policy meeting, now led by new Chair Kevin Warsh, and they’ve already shifted market expectations toward rate hikes instead of cuts — a scenario that typically squeezes risk assets like Bitcoin.
Inflation hits 4.2%
The Bureau of Labor Statistics reported a 0.5% monthly increase in May, following a 0.6% jump in April. Energy prices were the main culprit, climbing 3.9% in May after a 3.8% rise the prior month. Gasoline now averages $4.15 per gallon — up from $2.98 when the U.S. and Israel first struck Iran on February 28. Real wages fell 0.1% in May, the second straight monthly decline, meaning paychecks aren't keeping up with living costs.
Trump acknowledged a covert effort to route millions of barrels of oil through the Strait of Hormuz and predicted oil would 'come down like a rock' once the war ends. For now, energy keeps pushing prices higher.
Fed under Warsh faces a tough call
New Fed Chair Kevin Warsh inherits a central bank staring at accelerating prices and softening real incomes. The CME FedWatch tool puts a 98.4% chance that the Fed holds rates at 3.5%–3.75% at next week's meeting. But markets now price more than 70% odds of a rate hike by the end of 2026. Traders are leaning hawkish, and that shift is already weighing on crypto.
Bitcoin trades near $62,000, down almost 24% over the past 30 days and roughly 51% below its all-time high of over $126,000. A 1% bounce in the past day hasn't done much to repair the broader downtrend.
Oil, war, and the inflation loop
Trump didn't just comment on the CPI number — he tied it directly to the ongoing conflict with Iran. The president's prediction that oil prices will fall sharply after the war ends offers little immediate relief. For now, energy costs keep feeding inflation, which keeps the Fed hawkish, which keeps risk assets like Bitcoin under pressure.
The timing isn't great for crypto bulls. With a rate hike looking more likely by year-end and real wages shrinking, the macro backdrop offers few tailwinds. All eyes are on the Fed's June 18 decision — and on whether oil prices finally start to ease.
