The U.S. Consumer Price Index (CPI) for September came in hotter than expected, raising concerns about inflation and potentially impacting the Federal Reserve’s monetary policy decisions.
The CPI rose 0.2% in September compared to forecasts of 0.1%, and 0.2% in August. On a year-over-year basis, inflation increased to 2.4% from 2.3% in August. Core CPI, excluding food and energy costs, also rose more than anticipated, reaching 3.3% year-over-year.
Bitcoin Price Takes a Hit
The disappointing inflation data has negatively impacted the price of Bitcoin (BTC). Following the release of the CPI report, Bitcoin fell by nearly 2%, trading at around $60,800. This decline is likely attributed to increased concerns about the Fed potentially pausing or slowing down its rate-cutting cycle.
Fed’s Rate Cut Expectations Shift
The Federal Reserve surprised markets in September by implementing a larger-than-expected 50 basis point rate cut. This move sparked a rally in crypto prices as investors anticipated further rate cuts in the coming months. However, the recent inflation data and hawkish comments from Fed officials have led to a shift in expectations.
The CME FedWatch tool now indicates a zero percent chance of a 50 basis point rate cut in November. Moreover, there is a growing likelihood that the Fed may not cut rates at all, with the odds rising to 26% from 0% just a week ago.
Also Read: Bitcoin On Edge – Analyst Warns Of Potential Dip Below $50K As BTC Struggles Near $61K
Offsetting Factors
While the inflation data may reinforce the idea of a Fed pause, weak employment data could provide some offsetting relief. Initial jobless claims rose to 258,000 last week, suggesting a potential slowdown in the labor market. However, the impact of Hurricane Helene on the data remains uncertain.
Overall, the hotter-than-expected inflation numbers have dampened investor sentiment and led to a decline in Bitcoin prices. The Fed’s upcoming policy meeting will be closely watched as markets assess the likelihood of a rate cut and its potential impact on the cryptocurrency market.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
