US September CPI Increased Faster Than Expected, Disappointing

According to the US Consumer Price Index (CPI) report, inflation was stronger than expected in September.

The Consumer Price Index increased by 0.2% in September, compared to economists’ forecasts of 0.1% and a 0.2% increase in August. On an annual basis, CPI was announced as 2.3% in August and expectations for September were 2.5%, but the announced figure was 2.4%.

Core CPI, which excludes food and energy costs, rose 0.3% in September, compared to a 0.2% rate in August and forecasts of 0.3%. On an annual basis, it increased by 3.3% compared to the 3.2% rate in August and the expectations of 3.2%.

The price of bitcoin (BTC), which has been under pressure for most of the last ten days, fell further after the report and began trading at $60,800, down approximately 2 percent compared to the last 24 hours.

The US Federal Reserve surprised many by starting its rate-cutting cycle in September with a larger rate cut of 50 basis points rather than the assumed 25 basis points. There was a big rally in crypto prices as investors expected a similar discount in November.

But then, thanks to hawkish comments from Fed Chairman Jay Powell (and other central bank officials) and a much stronger-than-expected jobs report last Friday, those expectations were reversed and contributed to the pullback in crypto prices. According to CME FedWatch, which converts pricing in short-term interest rate markets into odds on what the Fed will do at each of its policy meetings, the likelihood of a 50 basis point interest rate cut in November has dropped to zero.

Today’s inflation numbers are likely to reinforce the idea that the Fed will not cut any interest rates in November. However, disappointing CPI data may be offset by employment data. It is not yet clear how much Hurricane Helene affected the data.