BTC price reacts to latest US CPI data ahead of FOMC meeting

In line with most expectations, the US consumer price index showed a 2.5% year-on-year increase in August, which is 0.4% lower than July’s figure.

According to experts, this all but settles the debate over whether the Federal Reserve will cut key interest rates by 25 or 50 basis points.

The 2.5% CPI increase in August shows a moderate decline in the metric over the past year. In fact, the year-on-year rise in August 2023 was 3.7%. The 2024 peak was reached in March at 3.5%.

Core CPI, which excludes more volatile sectors such as food and energy, rose 3.2% for August 2024, which is the same as July’s numbers.

This CPI report had particular meaning for investors as it is the last before the FOMC meeting on September 18-19. Let’s remember that the chairman of the Fed, Jerome Powell, said at the end of August that the time has come for the central bank to start lowering interest rates.

Most experts now believe the promising inflation rate numbers mean the Fed will introduce a 25 basis point cut next week.

If that were the case, development could already come at a price, especially for riskier assets like bitcoin.

The price of the major cryptocurrency was relatively stable before the CPI numbers came out. After the announcement, it dropped to $56,200 (on Bitstamp) before shooting up about a thousand.

However, given previous examples of substantial price moves, today’s $1,000 drop and rise seems pretty insignificant.

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