Bitcoin Holds Steady as Rate Traders Shift Odds to 85% Hike
Bitcoin's price held steady despite an August inflation report that left the Federal Reserve with mixed signals. The report showed that gasoline drove much of the headline increase, but monthly core inflation accelerated.
The combination kept Governor Christopher Waller's conditional case for a rate hike in play, even as Bitcoin maintained its daily gain of 2.08% over 24 hours. At the time of the report, CryptoSlate's live market data showed BTC at $78,683.
Reuters reported that futures had moved to about an 85% probability of a quarter-point increase at the Fed's September 15-16 meeting, from about 70% before the inflation report. The policy tension lay inside the inflation report: annual core inflation eased, while its latest monthly pace picked up.
The Bureau of Labor Statistics said the consumer price index increased 0.4% in August on a seasonally adjusted basis after a 0.1% rise in July. However, core CPI rose 0.3% in August after a 0.2% increase in July, creating the central split: the longer-run measure improved while the latest monthly pace accelerated.
Federal Reserve Governor Christopher Waller had made August inflation central to his next decision, saying 'continued progress toward the Fed's 2% goal would incline him to support holding the policy rate steady.' However, he also noted that a hot report could lead him to consider a hike at the September meeting.
The August report landed between the two sides of Waller's test: annual core inflation moved closer to target, but the latest monthly core reading moved away from the pace seen in July. The futures response showed that traders gave substantial weight to the latter risk.