Lawrence Damilola
The U.S. core inflation rate, which excludes food and energy costs, increased by 0.3% in August, surpassing the forecasted rise of 0.2%. This follows a 0.2% increase in July. On a year-over-year basis, the core Consumer Price Index (ŃPI), remained at 3.2%, per economists’ expectations.
On the other hand, the headline CPI rose by 0.2% in August, following the same increase in July. When it comes to year-on-year, the headline CPI was up 2.5%, slightly below the anticipated 2.6% and lower than the 2.9% increase in July.
Ben Ayers, a senior economist at Nationwide, noted in a statement to Reuters, “The road to normal inflation hit a bump in August as lingering pressures for housing and service costs once again cropped up.” The rise in core inflation amid steady headline CPI figures suggests that certain underlying cost pressures are still present, particularly in housing and other services.
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After the inflation data release, the likelihood of a larger interest rate cut by the Federal Reserve has diminished. Before the report, markets had priced in a 71% chance of a 25 basis point rate cut at the Fed’s policy meeting next week. After the inflation numbers were published, this probability increased to 85%, while the chances of a 50 basis point reduction dropped to 15%, according to the CME FedWatch Tool. Ayers stated, “This should clinch a smaller, 25 basis points rate cut from the Fed next week as Fed officials remain wary to feed any lingering price momentum for the economy.”
The central bank’s current benchmark overnight interest rate is in the 5.25%-5.50% range, but a rate cut of 25 basis points is expected to adjust this range to 5.00%-5.25%.
Bitcoin prices fell by 1.5% to $56,500 in the minutes following the inflation report. In traditional markets, U.S. stock index futures saw additional losses, with the S&P 500 and Nasdaq down by 0.5%. The U.S. 10-year Treasury yield rose three basis points to 3.68%, while the dollar index increased by 0.15%. The price of gold dipped by 0.45% to $2,532 per ounce.
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At the time of writing, Bitcoin has regained its momentum, and it is trading at $58,023, and it is up by 2.68% in the last 24 hours, according to CoinMarketCap.
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LAWRENCE
Lawrence is a cryptocurrency journalist covering blockchain developments and digital assets.
