October Fed Meeting: Interest Rates and Inflation Data Collide
The Federal Open Market Committee (FOMC) is scheduled to meet on October 27-28, but it will make its decision without seeing the Summary of Economic Projections or the September personal consumption expenditures (PCE) price index until after its meeting. The PCE price index is actually what the committee targets.
The committee will have several key data releases leading up to the meeting, including the employment report on October 2, the Consumer Price Index (CPI) on October 14, and the Producer Price Index (PPI) on October 15. The current projections suggest one more increase in interest rates before a pause.
The market is pricing in a roughly even chance of another rate hike at the meeting, with futures indicating a 47.1% probability of an increase against 52.9% for no change.
Meanwhile, the price of money has been rising, with the 10-year inflation-adjusted Treasury yield reaching 2.90% on September 28 from 2.44% at the end of August. Bitcoin rose about 6% in September carried by $2.5 billion in net inflows into US spot bitcoin exchange-traded funds (ETFs).
The real return on low-risk assets is seen as the main headwind for Bitcoin, and a hold above 2.80% would confirm this trend. A drop below 2.50% could remove the pressure.