- Inflation in September reached 2.1%, approaching the Fed’s target of 2%.
- Bitcoin’s value fell to $69,263.81 due to profit-taking after a recent rally.
Recent data shows that the Federal Reserve’s headline inflation rate was 2.1% in September, meeting expectations.
This interest rate came closer to the central bank’s target.
Fed inflation analyzed
An October 31 Commerce Department report showed a slight increase in inflation.
The personal consumption expenditure (PCE) price index rose seasonally by 0.2%.
This annual inflation rate of 2.1% was in line with Dow Jones projections. It suggested a steady move toward the Fed’s inflation targets amid continued economic assessments.
PCE data serves as the Federal Reserve’s key inflation indicator. Policymakers also keep a close eye on the additional metrics that guide their decisions.
The Fed targets annual inflation of 2%. This target has not been achieved since February 2021.
Core inflation remains a concern for the Feds, at a rate of 2.7% on record. This represented an increase of 0.3% compared to the previous month.
What’s more?
According to a report from Wu Blockchain,
The US core PCE price index for September was 0.3% MOM, in line with expectations of 0.3%, and the previous value was revised from 0.1% to 0.2%.
It further added,
“The PCE inflation index has seen its largest monthly increase since April, supporting the slowing pace of Fed rate cuts after a sharp cut last month.”
As these numbers unfold, markets expect the Fed to cut short-term interest rates at its meeting scheduled for next week.
Impact on the crypto market
The recent release of key inflation data led to profit-taking in the cryptocurrency market. Bitcoin [BTC] rose to $73,000, the highest level since March.
However, BTC’s momentum did not last. drop to $69,263.81, at the time of writing. This was reflected in a drop of 4.58% over 24 hours.
The decline of the cryptocurrency market was not just limited to Bitcoin.
On November 1, the global cryptocurrency market cap fell to $2.33 trillion, marking a 1.75% drop in 24 hours, according to CoinMarketCap.
In 2022, BTC fell below $20,000 as the entire market faced a recession. This decline was fueled by concerns about how the Federal Reserve is raising interest rates.
But in 2023, Bitcoin rose 1% after FOMC meetings, with gains reaching 3% after a week.
What awaits us?
As the Federal Reserve prepares for its upcoming meeting, market speculation about further rate cuts is mounting.
After a half-percentage point cut in September, when interest rates were adjusted from 4.75% to 5.00%, policymakers expect a quarter-point drop in November and December.
The Fed aims for a policy rate of 3.4% by the end of 2025. It aims for a stability of 2.9% in 2026 and 2027.
This reflects a deliberate approach to achieving neutral interest rates in times of economic headwinds.