The U.S. CPI for September grew at a faster pace than the expected 0.2%.
Bitcoin fell, and this news could further increase the probability that the Federal Reserve will pause interest rate hikes at its next policy meeting in November.
The CPI rose by 0.2% in September, and the core CPI rose by 0.3%, both of which were stronger than expected.
The data reinforced the view that the Federal Reserve will not only not cut interest rates by 50 basis points in November, but may not cut them at all.
Bitcoin prices have been under pressure over the past ten days, and the price of Bitcoin fell further after the data was released.
According to the Consumer Price Index (CPI) report released by the U.S. government on Thursday morning, the U.S. inflation data for September was stronger than expected.
The Consumer Price Index (CPI) for September rose by 0.2%, higher than the economists' forecast of 0.1%, and equal to the 0.2% increase in August. On an annual basis, the September CPI rose by 2.4% year-on-year, higher than the expected 2.3%, but slightly lower than August's 2.5%.
The core CPI, which excludes the more volatile food and energy costs, rose by 0.3% in September, higher than the expected 0.2%, and consistent with the 0.3% increase in August. The core CPI rose by 3.3% year-on-year, higher than the expected 3.2% and August's 3.2%.
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Over the past ten days, Bitcoin (BTC) prices have been under pressure. After the data was released, the price of Bitcoin fell further, currently trading at $60,800, down nearly 2% from 24 hours ago.
In September, the Federal Reserve surprised many by initiating a rate-cutting cycle and cutting rates by 50 basis points at once, rather than the expected 25 basis points. This action triggered a significant increase in cryptocurrency prices, as investors not only considered this rate cut but also expected the Federal Reserve to make another rate cut of the same magnitude at its next policy meeting in early November.However, due to remarks made by Federal Reserve Chairman Jay Powell and other central bank officials, coupled with the employment report released last Friday that far exceeded expectations, these expectations have undergone a significant reversal in the past ten days, which may also have contributed to the substantial correction in cryptocurrency prices during this period. According to the CME FedWatch tool (which converts the probabilities of the Federal Reserve's actions at each policy meeting through the pricing of the short-term interest rate market), the probability of the Federal Reserve cutting interest rates by 50 basis points in November has dropped to zero. In fact, before the release of this morning's inflation data, the interest rate market expected the probability of the Federal Reserve not cutting interest rates in November to have risen to 26%, up from 0% a week ago.
Today's inflation data may further reinforce expectations that the Federal Reserve will pause interest rate cuts in November. However, slightly offsetting this disappointing CPI data may be the weak employment data. Initial jobless claims— which have been at very low levels for several weeks—last week soared to 258,000, higher than the previous 225,000 and the expected 230,000. However, it is currently unclear to what extent the aftermath of Hurricane Helene has influenced this data.