Cryptocurrency investors are paying close attention to inflation data following this week’s announcements from the Federal Reserve. The recently released Personal Consumption Expenditures (PCE) data, which serves as an inflation indicator monitored by the Fed, has become increasingly significant in the upcoming period.
The Fed has indicated a pause in interest rate cuts due to concerns about stagnating inflation and strong employment. As a result, the price of BTC experienced a decline of over $10,000 shortly after. In order for this downward trend to reverse, an increase in unemployment rates and a decrease in PCE and Consumer Price Index (CPI) data are necessary.
The latest US PCE data was announced at 2.4% (expectation: 2.5, previous: 2.3), slightly below expectations which is considered favorable. The core PCE figure came in at 2.8%, lower than the expected 2.9%, with monthly increases also slightly lower. Following this data, which may provide some comfort to cryptocurrency investors, we should expect several key developments.
It is anticipated that President Trump will issue a supportive statement in response to Powell’s challenge to Bitcoin. Unemployment data is expected to increase, while PCE and CPI data should come in below expectations next month. The government debt ceiling issue is also expected to be resolved temporarily. The Fed’s interest rate decision in January, to be announced in 40 days, will be crucial during this period. Futures rate traders continue to predict that the Fed will pause interest rate cuts in January, with expectations for cuts in March and October.
