Key Points
- The Federal Reserve’s key inflation rate reached 2.1% in September, nearing its 2% target.
- Bitcoin’s value dropped to $69,263.81 due to profit-taking after a recent rally.
The inflation rate in September reached 2.1%, almost meeting the Federal Reserve’s 2% target. This was revealed in recent data, indicating a steady approach towards the central bank’s goal.
Fed Inflation Rate Analyzed
The Commerce Department reported a slight increase in inflation at the end of October. The personal consumption expenditures (PCE) price index rose by 0.2% on a seasonally adjusted basis for that month.
This 2.1% inflation rate over twelve months matched the Dow Jones projections and suggested a steady movement towards the Fed’s inflation targets amidst ongoing economic evaluations.
The Feds use PCE data as their main inflation indicator, and they also closely monitor other metrics to guide their decisions. The goal is to maintain a yearly inflation rate of 2%, a target not achieved since February 2021.
However, core inflation remains a concern for the Feds, with a recorded rate of 2.7%, marking a 0.3% increase from the previous month.
Impact on the Crypto Market
The recent release of key inflation data triggered profit-taking in the cryptocurrency market. Bitcoin [BTC] rallied to $73,000, its highest since March, but its momentum did not last, dropping to $69,263.81.
This was reflected by a 4.58% decline over 24 hours. The cryptocurrency market’s decline was not just limited to Bitcoin. On November 1st, the global crypto market capitalization fell to $2.33 trillion, a 1.75% decrease over 24 hours, according to CoinMarketCap.
In 2022, BTC fell below $20,000 as the entire market faced a downturn. This was due to concerns over the Federal Reserve’s approach to interest rate increases. However, in 2023, Bitcoin saw a 1% boost following FOMC meetings, with gains reaching 3% after a week.
As the Federal Reserve prepares for its next meeting, there is increasing market speculation about further rate reductions. After a half-percentage-point cut in September, bringing the rate to 4.75% to 5.00%, policymakers expect quarter-point decreases in November and December.
The Fed aims for a policy rate of 3.4% by the end of 2025, seeking stability at 2.9% through 2026 and 2027. This indicates a deliberate strategy to achieve a neutral interest rate in the face of economic challenges.