The price of Bitcoin (BTC) experienced a rise this Friday, surpassing $111,000. This movement occurred after the release of an anticipated US inflation report. The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose 3% annually. In this way, Bitcoin reacts to September inflation data that turned out slightly better than anticipated.
The CPI report, delayed one week by the government shutdown, was crucial. Economists, according to Trading Economics, had forecast an annual increase of 3.1%. However, the official 3% figure was received positively by the markets. Bitcoin gained 2% in the last 24 hours. Ethereum (ETH) also benefited, rising 2.5% to $3,960. Solana (SOL) was not left behind, posting a 2.1% gain to trade at $193.
The release of this data is vital for monetary policy. The Federal Reserve (Fed) will have several days to analyze this reading before its next meeting. The September report marked the third consecutive month of rising inflation, after cooling to 2.3% in April. Nonetheless, core inflation, which excludes food and energy, softened to 3% from 3.1% the prior month. This core cooling gives the Fed more room to consider its next moves.
Will Lower Inflation Spur an Interest Rate Cut?
The market widely expects the Fed to cut interest rates. A reduction of a quarter of a percentage point is anticipated at the next meeting. Risk assets, such as cryptocurrencies, tend to react well to more flexible monetary policies. Lower-than-expected inflation reinforces this narrative. Traders are also watching the possibility of another cut in December. Although expectations for that date dipped slightly from 91% to 88%, according to CME FedWatch data. The global economy remains attentive to these decisions.
Cryptocurrency prices have shown strength despite macroeconomic headwinds. Today’s inflation report provides temporary relief and focuses all attention on the Fed. Central bank officials have been cautious this year. However, Fed Chair Jerome Powell recently mentioned a “meeting-by-meeting approach.” The market will be watching for any signal about the health of the labor market and future rate adjustments.
