Fed's Rate Decision Faces Two-Week Test for Bitcoin as PCE Inflation Data Looms
The Federal Reserve's decision on interest rates is about to face a two-week test for Bitcoin. The Fed will meet on September 15-16, but they won't have the August personal consumption expenditures (PCE) inflation data until September 30.
On September 16, the Fed will make their policy decision based on the data available at that time, which includes August employment report, producer price inflation, and consumer price inflation. These numbers are due out between September 4-11.
However, the PCE inflation data is crucial for the Fed's decision-making process, as it guides their 2% longer-run inflation objective. The latest official PCE reading available before September 16 covers July, showing headline and core PCE prices rose 0.2% from June.
Bureau of Economic Analysis (BEA) Governor Christopher Waller has estimated that a new method for portfolio-management services could lower 12-month PCE inflation by a few tenths of a percentage point. This change will be reflected in the revised PCE data on September 30, which can alter how investors judge the inflation trend before later Fed meetings.