The U.S. Producer Price Index posted its largest monthly increase in five months in December, a signal that has cryptocurrency analysts on Binance Square warning traders to prepare for potential volatility across digital assets as inflation concerns complicate expectations for Federal Reserve interest rate cuts.

What Happened: PPI Jumps 0.5% in December

The Labor Department reported that the PPI for final demand rose 0.5% in December, the biggest gain since July, following a 0.2% increase in November. Services drove the increase, with a 1.7% jump in margins for final demand trade services accounting for two-thirds of the rise.

The Federal Reserve kept interest rates unchanged at 3.50%-3.75% on Wednesday. Fed Chair Jerome Powell attributed inflation overshoots to tariffs but said he expects tariff-related inflation to peak "sometime in the middle quarters of the year."

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Why It Matters: Crypto Faces Rate Cut Uncertainty

Cryptocurrency commentators flagged the data as a warning sign for digital asset markets. RJCryptoX wrote on Binance Square that "higher PPI equals sticky inflation risk," adding that delayed rate cuts could trigger "volatility across USD, gold, and crypto."

The Crypto Trader Official A noted that the PPI acts as an early indicator before consumer inflation numbers appear. The analyst warned that "crypto and equities may see short-term volatility" and advised traders to "stay flexible, manage risk, and avoid over-leverage during high-impact data periods."

Michael Hanson, an economist at JPMorgan, said the data suggests businesses have passed along some tariff costs as higher prices. He expects policy to remain on hold given inflation running "meaningfully above target."

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