The Reserve Bank of New Zealand cut interest rates by 25 basis points to 3.25% to April 2022 lows, the sixth such rate cut in a row, and matching expectations. 

Australia’s consumer prices rose 2.4% y/y in April, beating estimates of 2.3%, and same as the previous reading.

The data showcases the impact of inflationary pressures on Australian monetary policymakers, and huts the odds of an Australian rate cut in July. 

The Federal Reserve warned against increasing economic risks when it decided to hold interest rates unchanged in May.

Fed Chair Jerome Powell focused on uncertainty for the world’s largest economy following Trump’s aggressive tariff decisions during his post-Fed meeting speech this month.

Now markets expect two interest rate cuts overall this year, with some even thinking that this is overly optimistic as US inflation is expected to persist at 3.4%.

Bank of America’s strategists say the upcoming Fed’s meeting minutes will shed more light on the central bank’s decision and stance in response to a potential inflationary recession if occurred. 

Barkclay’s analysts also note the markets have forgotten about tariffs fairly quickly with the focus on tariffs, but the overall macro picture is still held to the tariff war dilemma. 

Some analysts dismissed the possibility of the return of the trade war as Trump already showed leniency and desire to normalize the situation as he did with China, and will likely do with the EU.

Inflation Arguments 

Minneapolis Fed President Neil Kashkari said there’s a “healthy debate” in the Fed about whether the inflationary impact of Trump’s tariffs are transient or not.

He himself believes that trade negotiations could take months or years and might include reciprocal tariffs that will impact economic performance and prices.

The White House has called on the Fed to treat any price spike as temporary, with Trump once again calling on the Fed to cut rates, but officials remain wary.

Fed official Chris Waller believes that tariff-induced inflation are transient, and that inflation could settle at 3% if current negotiations proved effective.

Now the Fed awaits its favorite inflation index, the Core Personal Consumption Expenditures index this week, expected to clock in at a 2.5% rise in nApril, down from 2.6% in March.

Crucial second-reading GDP growth data will also be released, after the initial reading showed a 0.3% contraction.

The Fed decided to maintain interest rates unchanged at below 4.5% at the May meeting, after cutting rates by an entire point last fall.

Fed Chair Powell warned the US economy might veer clear off its employment and inflation targets this year, which would be concerning to policymakers. 

Kashkari, at his latest speech, supported his colleague, Beth Hammock, who said that it’s better to be slow on the right path than to be quick on the wrong path.

Bitcoin rose on Tuesday and moved in a positive zone for the fourth straight session, approaching recent record highs amid a positive sentiment in the crypto market. 

Giant corporation MicroStrategy raised its bitcoin holdings to new record highs, with the price also bolstered by strong investment influx into US bitcoin exchange funds.

The Price

Bitcoin rose 1.2% at Bitstamp to $110,789, with a session-low at $107,562.

On Sunday, bitcoin added 0.4%, marking the third profit in a row.

Bitcoin hit a record high last week at $112,000.

Crypto Market Value 

The market value of cryptocurrencies rose by $35 billion to a total of $3.588 trillion.

MicroStrategy 

Through the X platform, MicroStrategy's chairman and co-founder Micheal Saylor announced a new round of bitcoin purchases amounting to 4020 units, bringing the company’s total holdings to a new record high.

The purchase occurred between May 19 and 25, with the company spending $427.1 million, averaging $106,237 per unit.

Following the new acquisition, the company now holds 580,250 bitcoins in total, averaging $69,974 per unit, with a total value of $40.61 billion.

Exchange Funds

Bitcoin exchange funds added nearly $212 million of investments in the US on Friday, expanding the cash influx for the eighth straight day to a total of $3.5 billion.