As year-over-year and core inflation data for September in the U.S. exceeded expectations, Bitcoin fell by about $1,000, bringing the possibility of a Fed rate hike in October back into focus.
According to a report by CoinDesk citing data from the U.S. Bureau of Labor Statistics (BLS), September CPI rose 0.6% month over month. The result matched the 0.6% forecast but was above August’s 0.4% increase.
The bigger surprise came in annual inflation: The rate rose to 3.7% from 3.4% in August, exceeding the 3.6% estimate.
Core inflation also exceeded expectations
Core CPI, which excludes food and energy prices, rose 0.3% month over month. The pace of the increase was unchanged from August but exceeded economists’ 0.2% forecast.
Annual core inflation rose from 2.4% to 2.6%. The forecast for this indicator was 2.5%. Thus, while monthly headline CPI matched expectations, annual headline inflation and both core indicators came in higher than expected.
Bitcoin’s initial reaction was a drop
After the data was released, Bitcoin fell about $1,000 to around $82,800. This level reflects the market’s initial reaction following the announcement, as reported in the article.
The U.S. 10-year Treasury yield rose 6.5 basis points to 5.284%. Stock index futures also saw selling, with Nasdaq 100 futures falling 0.65%.
Could a rate hike move from December to October?
Before the data, Fed officials’ remarks pointed to a 25-basis-point rate hike by year-end. The prevailing market expectation was that the Fed would hold rates at this month’s meeting and raise them at the final meeting of the year in early December.
The higher-than-expected inflation reading has reopened debate over that timeline. According to the article’s analysis, the possibility of a rate hike in October could come back into focus; this is not an announced Fed decision, but a possible effect of the new data on rate expectations.
While expectations of low inflation featured prominently in Bitcoin’s rise ahead of the data, the reported figures presented the market with stronger price pressures.
Not investment advice.