The U.S. PCE inflation data have come in line with expectations, signaling that U.S. inflation remains elevated. Bitcoin reacted to the inflation data release, with the flagship crypto down on the day.
U.S. PCE Inflation Matches Estimates, Bitcoin Weakens
Bureau of Economic Analysis data shows that the November PCE came in at 2.8% year-over-year (YoY), in line with expectations. Month-over-Month (MoM), inflation rose to 0.2%, also in line with expectations.
The Core PCE inflation data also had similar readings in November, coming in at 2.8% YoY and 0.2% MoM, both in line with expectations. This signals that U.S. inflation remains elevated, strengthening the case for the Fed to hold rates at the January FOMC meeting next week.
The Fed is expected to hold rates steady after cutting rates three times last year. According to CME FedWatch data, there is a 95% chance they will hold rates steady.
The PCE inflation data release follows the PPI release, which also indicated that U.S. inflation remains elevated. The PPI rose 3% YoY in November, above expectations of 2.7%. Some Fed officials, such as Fed President Austan Goolsbee, have continued to raise concerns that inflation remains well above their 2% target.
Meanwhile, Bitcoin has further dropped following the release of this latest inflation data. At press time, the flagship crypto is trading at around $88,900, down from an intraday high above $90,000. BTC notably dropped from $90,000 earlier in the day following the release of the U.S. GDP and jobless claims data.
These macro data further dampen hopes of a Fed rate cut happening anytime soon. As CoinGape reported, the first Fed rate cut is now expected to come at the June FOMC meeting. The odds of the Fed making three rate cuts this year have dropped to 27%, according to Polymarket data.
