While the US CPI came in as expected last month, the core rate rose more than economists forecast, potentially sealing the deal for the US Federal Reserve to cut its benchmark lending rate by just 25 basis points next week.
CPI rose 0.2% in August compared with economists' forecasts of 0.2% and 0.2% in July. On a year-on-year basis, CPI was 2.5% higher than expectations of 2.6% and 2.9% in July.
Core CPI (excluding food and energy costs) rose 0.3% in August, faster than forecasts of 0.2% and 0.2% in July. The core rate was 3.2% year-on-year, compared with 3.2% expected and 3.2% in July.
When the news of inflation came out, Bitcoin price dropped a bit in the minutes following the news and is currently up 0.21% over the past 24 hours to $57,070.
BTC 4-hour price chart | Source: Tradingview
In traditional markets, US stock index Futures Contract posted further losses, with both the S&P 500 and Nasdaq down 0.5%. The yield on the benchmark 10-year US Treasury note rose 3 basis points to 3.68% and the dollar index rose 0.15%. Gold fell 0.45% to $2,532 an ounce.
Ahead of the data, investors were pricing in a 71% chance that the Fed would cut its benchmark federal funds rate range by 25 basis points to 5%-5.25% when it meets next week, and a 29% chance that the central bank would cut by 50 basis points to 4.75%-5%, according to CME FedWatch . The persistent Dai of core inflation reflected in this morning’s report — which monetary policymakers typically prefer to the key number — likely reinforced expectations that the Fed would cut rates lower.
Indeed, 15 minutes after the CPI release, the probability of a 25 basis point Fed rate cut next week jumped to 85%. A look at the months ahead shows the odds of a 75 basis point Fed rate cut by year-end have risen to 14% from 9% a day earlier.
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Dinh Dinh
According to Coindesk
