Fed Inflation Rate Reaches 2.1% in September
The Federal Reserve’s key inflation rate reached 2.1% in September, aligning with expectations and moving closer to the Fed’s target. This increase in inflation was reported in a recent Commerce Department release on Thursday.
Key Data Points:
- The personal consumption expenditures price index rose by 0.2% in September, seasonally adjusted.
- The 12-month inflation rate stood at 2.1%, meeting the projections set by Dow Jones.
The PCE data is crucial for the Fed as it serves as their primary measure of inflation. Policymakers also keep an eye on other inflation indicators. The Fed’s goal is to maintain inflation at 2% annually, a level it has not seen since February 2021. Notably, the headline rate for September decreased by 0.2 percentage points compared to August.
Core Inflation Rate:
While the overall inflation rate stood at 2.1%, the core inflation rate rose to 2.7%, marking a 0.3% increase from the previous month. This data arrives as the market speculates on the possibility of the Fed lowering its benchmark short-term borrowing rate at the upcoming meeting.
Crypto Market Reaction
The release of the inflation rate coincided with a wave of profit-taking in the crypto market following a rally that saw Bitcoin hit $73,000, its highest level since reaching all-time highs of $73,750 in mid-March.
As investors absorb the latest economic data, cryptocurrencies have generally traded in the red, with notable losses reported across various digital assets. Bitcoin, Ethereum, Pepe, Chainlink, Bonk, and WIF experienced losses ranging from 1.7% to 7% in the last 24 hours.
This selling pressure triggered liquidations amounting to approximately $136 million, as reported by CoinGlass data.
Impact on Crypto Markets:
Inflation rates hold significant importance for the crypto market, as they could influence the Federal Reserve’s monetary policy decisions. A lower inflation rate might signal a more accommodative policy stance, sparking optimism among crypto investors who view it as a potential catalyst for price appreciation. Conversely, high inflation rates are generally unfavorable for risk assets, including cryptocurrencies.
Looking ahead, the market will likely closely monitor any signals from the Fed regarding its future policy actions. Policymakers are currently observing a “blackout period” before the Nov. 6-7 meeting, refraining from making statements based on recent data releases or discussing their policy and economic outlook.