US Consumer Price Index (CPI) inflation data for July met expectations, further easing concerns about a Fed rate hike this year. Bitcoin recovered today following the release of the inflation data, rising above the psychological level of $64,000.
US Consumer Price Index Drops to 3.4%, Bitcoin Recovers.
According to data from the US Bureau of Labor Statistics, the Consumer Price Index in July fell to 3.4% year-on-year, matching expectations. The index also fell to 0.1% month-on-month, also in line with expectations.
Meanwhile, the core Consumer Price Index fell to 2.5% year-on-year and 0.2% month-on-month, meeting expectations. Bitcoin recovered following the release of the inflation data, further easing concerns about a Fed rate hike this year.
According to TradingView data, the leading cryptocurrency is currently trading around $64,100, up from the intraday low near $63,400. However, Bitcoin continues to trade in a narrow range amid uncertainty related to the US-Iran war and the Strait of Hormuz and their impact on energy prices.
Fed President Austin Goolsbee called inflation the biggest problem for the economy at the moment, indicating his potential support for a rate hike. Fed President Neel Kashkari, a voting FOMC member, called for raising rates to fight inflation.
Reduced Likelihood of Rate Hike Tempo
The probability of a Fed rate hike at the September FOMC meeting has further decreased following the release of the CPI inflation data, which is a positive factor for Bitcoin and the broader cryptocurrency market. According to market forecasts, the probability of rates remaining unchanged after the meeting is 67%.
Data from the leading cryptocurrency market prediction platform Polymarket also shows that the probability of a rate hike this year has fallen to 54% from a recent high of 60%. In July, the probability of a hike reached 79% amid the escalation of the US-Iran war.
Attention will now shift to tomorrow's Producer Price Index (PPI) inflation report, which will provide a more comprehensive view of the current state of inflation in the country. A low PPI inflation reading could further ease rate hike concerns, especially given July's employment report indicating ongoing labor market instability.
