The U.S. PCE inflation data have come in line with expectations, with the Fed’s inflation gauge remaining unchanged from January. Bitcoin has shown signs of recovery amid this inflation data release, which is notably the last inflation data before the U.S.-Iran war began at the end of February.
U.S. PCE Inflation Remains Unchanged, Bitcoin Recovers
The Bureau of Economic Analysis latest release shows that PCE inflation rose to 2.8% year-over-year (YoY) in February, in line with expectations. The index came in at 0.4% month-over-month (MoM), also in line with expectations.
Meanwhile, core PCE cooled to 3%, in line with expectations and lower than the 3.1% recorded in January. MoM, the core index rose to 0.4%, also in line with estimates. The Bitcoin price is notably up today amid this inflation release.
BTC is currently trading at around $71,200, rising from an intraday low of $70,500, according to TradingView data. The latest PCE inflation signals that inflation remains steady, which is a positive for the leading crypto and the broader crypto market.
However, it is worth noting that this inflation datapoint covers the period before the U.S.-Iran war began. As such, there remains uncertainty about the current inflation situation in the U.S. since the war began.
However, the FOMC minutes released yesterday signaled that the Fed is still open to Fed rate cuts this year as the Iran war poses dual risks to inflation and the labor market. However, the majority of Fed officials stated that they would be open to rate hikes if inflation continues to trend well above their 2% target.
At the moment, the Fed is likely to hold interest rates unchanged at this month’s FOMC meeting, which will hold on April 29th. CME FedWatch data shows a 98.4% chance that the Fed will keep interest rates unchanged at this meeting.
First Iran-War Inflation Data Drops Tomorrow
The March U.S. CPI inflation data is scheduled for release tomorrow. This will be the first inflation data point that provides insights into the current inflation situation since the U.S.-Iran war began.
The CPI is expected to come in hot, which could spark significant volatility for Bitcoin and other crypto prices. The median forecast among Wall Street giants is that the March CPI rose to 3.3% YoY, up from 2.4% in February, and to 0.90% MoM, up from 0.3% in February.
Meanwhile, they predict that the core CPI rose to 2.7% YoY from 2.5% in February and to 0.3% MoM, up from 0.2% in February. Oil prices have reached multi-year highs during this U.S.-Iran war, putting inflationary pressure on goods and services.