Fed Signals Dovish Turn as Shutdown-Distorted CPI Sparks Recession Risk and Prospective Rate Cuts

COINOTAG News, December 22, reported that Federal Reserve Governor Milan noted last week’s inflation readings showed an abnormal signal, attributed to the government shutdown. The distortion in housing inflation contributed to a pronounced uptick in the year-end CPI, outlining potential shifts in Fed policy expectations amid ongoing macro uncertainty.

Looking ahead, the data path could tilt markets toward a dovish posture if disinflation signs accumulate; investors will evaluate this through the prism of policy rates and recession risk. The view is that rate cuts are plausible over the medium term, with implications for liquidity across risk assets, including crypto markets.

Traders should monitor CPI components and central-bank guidance for credibility, as a confirmed dovish shift could unlock selective upside for digital assets while underscoring disciplined risk management.