- U.S. inflation rose 0.2% in September, exceeding expectations and signaling rising pressures.
- Core CPI climbed 0.3%, highlighting persistent inflation across various economic sectors.
- Fed rate cut expectations now shift, with a 26% chance of no cut at the November meeting.
Inflation in the United States increased more than anticipated last month, sparking concerns amongst the Federal Reserve over the future direction of interest rates. The rise in the Consumer Price Index (CPI) for September was 0.2%, surpassing market expectations for a 0.1% increase. Cryptocurrencies, especially Bitcoin, are seeing high volatility as investors process the inflation data, with BTC prices falling in the wake of the report.
From the previous year, CPI increased by 2.4%, which is just an uptick from the 2.3% that economists had anticipated. This is a slowdown from the 2.5% uptick recorded in August, but inflation has proven to be stickier than some expected.
Core CPI Surges
The Federal Open Market Committee’s preferred inflation measure, the core consumer price index, excludes food and energy. In September, the core CPI climbed 0.3%, above the projected 0.2% gain. On a yearly basis, it rose 3.3%, compared to expectations of 3.2%, proving that inflation trends are still very much present in almost all industries.
The recent Inflation data has created confusion in the direction of the U.S. Federal Reserve’s policy rates. In September, the Fed delivered a 50-basis-point rate cut, against the expectation of a 25-basis-point cut, responding to the economy’s slowdown.
At first, the rate cut boosted confidence and the markets, including cryptocurrencies, but recent data has undone this. The BTC prices got a brief boost from the aggressive cut by the Federal Reserve, but the better-than-expected inflation and job data have changed the market sentiment.
Fed Rate Cut Outlook
The CME FedWatch tool that predicts shifts in interest rates has now predicted that there will be no more big rate cuts in November. In fact, there is now a 26% chance that the Fed may not cut rates at all, a change from a week ago.
Bitcoin Could Reach $90K if Trump Wins U.S. Election: ReportBitcoin prices dropped in reaction to the inflation data, trading at $60,591 as of press time after a 1.62% decline. The cryptocurrency’s recent performance shows the general market volatility as investors reassess the policy changes by central banks.
Some market participants think that poor employment figures can still impact the FED’s policy. New unemployment filings rose to 258,000 in the week before yesterday, compared to market expectations of 230,000, suggesting that the labour market is weakening.
