The US Consumer Price Index (CPI) data for September, released today, indicated a higher-than-expected inflation outlook for Bitcoin, the cryptocurrency market, and the Federal Reserve’s (FED) interest rate policy.
The rise in annual CPI to 3.7%, exceeding market expectations, and core inflation also higher than anticipated, have strengthened concerns that the Fed may be cautious about cutting interest rates and may even consider raising them again. Following the release of the data, Bitcoin fell below $83,000. The market’s focus is now on the Fed meeting to be held on October 27-28.
Inflation Concerns Growing: Fed’s Interest Rate Hike May Not Be a One-Time Threat!
In September, the CPI data rose 3.7 percent year-on-year, reaching its highest level since May. At this point, the renewed acceleration of inflation in the US strengthens expectations of a tightening Fed interest rate policy, while Bloomberg macroeconomist Chris Anstey stated that the incoming data suggests that the September rate hike may not be a one-off event.
The analyst said that recent statements from Fed officials indicate they are not preparing for a series of interest rate hikes in October. According to the analyst, today’s stronger-than-expected CPI data may not be enough to change this stance, meaning it may not be sufficient on its own to justify an October rate hike. However, it will strengthen expectations that the Fed will pursue a more tightening policy.
At this point, the analyst notes that expectations for Fed policy tightening will increase and that the September interest rate hike will be almost certainly not a one-off action.
After the CPI figures, the likelihood of the Fed raising interest rates in October has increased!
Following the release of US September CPI data, the probability of the Fed keeping interest rates unchanged in October fell to 50.7%, while the probability of a 25 basis point rate hike rose to 49.3%, according to CME’s FedWatch tool.
For December, the probability of the Fed keeping interest rates unchanged is priced at 3.5%, the probability of a 25 basis point rate increase is 50.6%, and the probability of a 50 basis point rate increase is 45.9%.
Bank of America’s FED Prediction!
According to CNBC, Bank of America (BofA) analysts have updated their forecasts regarding the Federal Reserve’s interest rate policy. The bank stated that they expect the Fed to raise interest rates three more times by June 2027. *This is not investment advice.
Continue Reading: As US Inflation Pressures Bitcoin, What Will the Fed’s Next Move Be? Analysts Evaluate Today’s CPI Data!