An unexpected decline in U.S. wholesale inflation, as measured by the Producer Price Index (PPI), has increased expectations for a Federal Reserve interest rate cut in September. The PPI unexpectedly fell 0.1% in August, contrasting with economists’ forecasts for a 0.3% increase.
The annual PPI also came in well below expectations at 2.6%. This soft inflation data, combined with signs of a weakening labor market—including a major downward revision to job creation figures and recent job losses—has led to a near certainty of a quarter-point rate cut at the upcoming Fed meeting.
In response to the news, Bitcoin’s price surged past $113,000, as traders bet that looser monetary policy would improve liquidity and benefit risk assets. The article notes that some analysts are forecasting a further rally toward $150,000 if rate cuts accelerate.
However, the market remains at a critical juncture, with strong long-term accumulation contrasted by weakening momentum and bearish signals in the futures market. While long-term holders show high conviction, short-term price action will likely depend on whether Bitcoin can hold key support levels and attract renewed institutional demand.
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