Bitcoin continued its daily gains, hitting $61,300, after the July U.S. Consumer Price Index report came in broadly in line with expectations and paved the way for the Federal Reserve to begin cutting interest rates mid-year. See you in September.
The consumer price index rose 0.2% in July, according to a U.S. government report released Wednesday morning. This compares with a 0.1% decline in June and expectations for a 0.2% increase.
Year-over-year, the CPI rose 2.9%, compared with a 3% forecast and a 3% rate in June. Core CPI, which excludes food and energy costs, rose 0.2% in July, matching expectations for a 0.1% increase in June.
Year-over-year, core CPI rose 3.2%, in line with expectations and below June’s 3.3% rate.
Bitcoin (BTC) edged up to $61,200 after the report largely met expectations. Before the data was released this morning, the debate over whether the Federal Reserve would cut its benchmark interest rate at the bank’s next meeting was over.
There was no chance that interest rates would stay in the current range of 5.25% to 5.50%, according to the CME FedWatch Index, which is calculated based on positions in short-term interest rate markets. Indeed, this indicator shows that the probability of a 50 basis point rate cut is 52.5% and the probability of a 25 basis point rate cut is 47.5%.
It seems that this report will not represent a significant change to these calculations. The next big development in the US macroeconomy will be tomorrow's initial jobless claims and retail sales. Also before the end of August, the Federal Reserve will meet in Jackson Hole, and previous Fed chairs have sometimes used the conference to announce or introduce major policy changes.
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