As a seasoned financial analyst with over two decades of experience under my belt, I’ve seen my fair share of market fluctuations and economic indicators. Today’s inflation report release by the Fed is yet another data point to add to my collection.
According to a recent report from the Commerce Department, the anticipated key inflation rate increased slightly to 2.1% in September, inching nearer to the Federal Reserve’s desired level.
For the given month, the Personal Consumption Expenditures Price Index went up by 0.2% after being adjusted for seasonal variations. Meanwhile, the annual inflation rate based on this index was 2.1%, as anticipated by Dow Jones analysts.
In September, the U.S.’s predicted annual increase in its core Personal Consumption Expenditures (PCE) price index remained steady at 2.7%. This figure matched expectations set for a 2.6% rise and last month’s recorded 2.7% as well. Additionally, the index saw a 0.3% monthly increase in September, aligning with forecasted growth and revised from the previously reported 0.1%.
— Wu Blockchain (@WuBlockchain) October 31, 2024
The PCE index acts as the Federal Reserve’s principal indicator of inflation, and they also track other related indicators. The Federal Reserve aims to maintain an annual inflation rate of 2%, a level not seen since February 2021. The headline figure for September experienced a decrease of 0.2 percentage points compared to August.
As an analyst, I’ve noticed that the fundamental inflation rate has risen to 2.7% this month, marking a 0.3% increase from last month. This upward trend in inflation could potentially sway the Federal Reserve to lower its key short-term lending rate during their upcoming meeting next week, as market predictions indicate.
Here’s how crypto reacted
The unveiling of the main inflation figure happened at a time when there was profit-taking on the cryptocurrency market, after an upsurge that propelled Bitcoin to $73,000 – its peak since attaining record highs of $73,750 in mid-March.
After analyzing the recent economic statistics, it seems that most cryptocurrencies have experienced a downturn, with noticeable declines recorded across various platforms. In the past day, Bitcoin, Shiba Inu, Pepe, Chainlink, Bonk, and WIF have seen losses ranging between 1.7% to 7%.
The selling has resulted in a wave of liquidations worth around $136 million, according to CoinGlass data.
The rate of inflation in the economy has been a significant issue for the cryptocurrency market, mainly because it can impact the Federal Reserve’s decisions about monetary policy. If inflation is low, this could suggest a more relaxed approach from the Fed, which might make crypto investors feel optimistic since they view it as a possible factor leading to price increases. On the other hand, high inflation rates tend to be unfavorable for risky assets like cryptocurrencies.
Over the next few days, the market is expected to closely monitor any indications from the Fed concerning its future actions regarding policies. At this point, policymakers are in a period of silence before their meeting scheduled for Nov. 6-7, during which they will abstain from making comments based on data releases or expressing opinions about overall policy and economic expectations.
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2024-10-31 19:10