Bitcoin – Identifying the impact of Fed’s inflation rate

September’s inflation rate reached 2.1%, nearing the Fed’s target of 2%.
Bitcoin’s value dropped to $69,263.81 amid profit-taking following a recent rally.

As a seasoned crypto investor with a knack for deciphering market trends and economic indicators, I must admit that the recent developments have left me both intrigued and a bit jittery. The Federal Reserve’s inflation rate reaching its target of 2% is indeed a significant milestone, but the core inflation rate of 2.7% remains a cause for concern.

In September, fresh data indicates that the Federal Reserve’s main inflation figure hit 2.1%, as anticipated.

This rate was inching closer to the central bank’s target.

Fed inflation rate analyzed

A Commerce Department report on the 31st of October showed a slight uptick in inflation.

For the given month, the seasonally adjusted Personal Consumption Expenditures (PCE) price index increased by 0.2%.

The inflation rate for the past year, at 2.1%, matched up with Dow Jones’ predictions, indicating a consistent progression towards the Federal Reserve’s inflation objectives as they continue to evaluate the economy.

The primary gauge of inflation for the Federal Reserve is the PCE data. Moreover, they also scrutinize other relevant measures to inform their decision-making process.

federal authorities strive to keep the yearly inflation rate around 2%, but they haven’t reached that goal since February last year.

The Federal Reserve continues to be watchful about persistent core inflation, as it increased to 2.7% in the latest data, marking an uptick of 0.3% compared to the preceding month.

What’s more?

As per a post by Wu Blockchain,

For September, the U.S. monthly rate of change for its Core Personal Consumption Expenditures Price Index matched forecasts at 0.3%. This figure also saw an upward revision from the initially reported 0.1%, now standing at 0.2%.

It further added,

The PCE inflation index experienced its biggest monthly growth spike since April, backing up the Federal Reserve’s decision to reduce the speed of interest rate reductions following a significant reduction in the previous month.

In the upcoming days, financial markets are expecting that the Federal Reserve will lower their short-term lending rate during their scheduled meeting next week.

Impact on the crypto market

The recent release of key inflation data led to profit-taking in the cryptocurrency market. Bitcoin [BTC] rallied to $73,000—its highest since March.

Nevertheless, Bitcoin’s progression weakened, falling to $69,263.81 as of the latest report. This dip represented a decrease of 4.58% in the last 24 hours.

The cryptocurrency market’s decline was not just limited to Bitcoin.

On November 1st, the total cryptocurrency market value dropped to approximately $2.33 trillion, marking a decline of 1.75% within a 24-hour period, as reported by CoinMarketCap.

2022 saw Bitcoin (BTC) dip below $20,000 due to a broader market slump. The decline was largely driven by concerns about the Federal Reserve’s plans for raising interest rates.

But, in 2023, Bitcoin saw a 1% boost following FOMC meetings, with gains reaching 3% after a week.

What lies ahead?

Preparing for the upcoming Federal Reserve meeting, I find myself pondering on the potential for interest rate cuts based on the growing market chatter.

After reducing interest rates by 0.5 percentage points in September, bringing them down to between 4.75% and 5.00%, policy makers are expecting to lower the rate further by a quarter of a point each in November and December.

By the year 2025, the Federal Reserve intends to set the policy rate at approximately 3.4%. From 2026 to 2027, they aim to maintain this rate around 2.9%, striving for stability during these years.

This reflects a deliberate approach to achieve a neutral interest rate amid economic headwinds.

2024-11-01 19:04

Fed inflation rate analyzed

What’s more?

Impact on the crypto market

What lies ahead?

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