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Today’s news drop concerns US Core Inflation data of August that the Bureau of Labour Statistics released. This time, it comes with 0.3% variations, slightly higher than predicted compared to the past few months. What’s the impact of it on the Bitcoin price and Federal Reserve interest rate lies in this news and you must want to know about it. So, let’s catch the major points.
Inflation Update: August 2024
The Bureau of Labor Statistics (BLS) has released data showing US inflation and core inflation analysis. The Core Price Index (CPI) has met expectations at 0.2%; the latter comes surprising by a higher value of 0.3% in August, compared to 0.2% in July.
Uncovering the highlighting points, Bitcoin has successfully recovered some of its earlier losses after the news came in. Simultaneously, the chances are that the Federal Reserve will likely lower interest rates by only 0.25% in its upcoming meeting. The Core CPI value is faster than expected and declares that underlying inflation pressure issues remain.
Bitcoin and Traditional Markets React
As mentioned earlier, the Core CPI report impacted financial institutions. This includes Bitcoin prices, US stock index futures, 10-year US Treasury yield, dollar index, and gold prices. All these prices were affected by a little variation in core inflation in August.
Core Inflation 0.2% Value Impact On | Percentage Increase/decrease | Price |
Bitcoin | 1.5% drop | $56,500 |
US stock index futures | 0.5% decline in Nasdaq and S&P 500 | |
10-year US Treasury yield | 3.68% rise | |
Dollar index | 0.15% rise | |
Gold | 0.45% drop | $2,532 per ounce |
Fed Rate Cut Expectations Adjust
In the previous section, you read how the US Core CPI report disturbed financial organisations. It’s time to examine its impact on the Federal Reserve interest rate. Overall, the unpredictable rise of 0.3% core inflation suggests that Federal institutions will cut rates with changed percentages.
For instance, if the interest rate were likely to be reduced by 25 basis points before the report, it would be cut by 50 basis points after the report. Although the rate cut may be smaller than previously thought, the continuous rise would affect the Federal Reserve’s future plans.
Conclusion
The US Core Inflation rose by 0.3%, challenging upcoming Federal Reserve interest rate decisions and prominent challenges in response to inflation management.
