The latest U.S. Personal Consumption Expenditures (PCE) inflation report came in as expected, but it still highlights that inflation remains sticky and above the Federal Reserve’s 2% target. Following the release, Bitcoin briefly surged above $109,000 before pulling back slightly.
According to the Bureau of Economic Analysis, PCE inflation rose to 2.7% year-over-year in August, compared with 2.6% in July. On a monthly basis, prices increased by 0.3%. Core PCE, which excludes food and energy, stayed at 2.9% YoY and 0.2% MoM, unchanged from the prior month. This marks the highest PCE level since February.
The data reinforces concerns voiced by Fed Chair Jerome Powell and other officials earlier this week, who cautioned against moving too quickly with further rate cuts amid persistent inflation pressures.
Bitcoin reacted strongly to the news, climbing from intraday lows of $108,713 to a peak above $109,000 before settling just under $109,500. Despite the bounce, analysts warn that sticky inflation could weigh further on the broader crypto market.
This PCE release is the first major macroeconomic indicator since the Fed delivered its first rate cut of the year last week. Market focus will now shift to upcoming PPI, CPI, and labor data, which could heavily influence the Fed’s next decision at the October FOMC meeting. For now, officials remain divided: Powell has tempered expectations for more cuts, while others, including Michelle Bowman and Stephen Miran, argue that further easing may be needed to support a weakening labor market.
