Rate Hike Odds Surge to 71%, Crypto Prices Plummet
The release of hot producer inflation data has led to a surge in odds of a Fed rate hike, reaching 71% as of Thursday. This increase in probability follows hotter-than-expected PPI numbers, which rose 0.4% in August and 5.4% year-over-year. The market is currently pricing in a significant chance of a rate hike at next week's FOMC meeting.
Bitcoin's price has fallen under $77,000, while Ethereum has dropped below $2,500, contributing to the overall decline in crypto prices. COIN stock also fell 1.24% to $1723 on Thursday as investors reduced risk due to tighter monetary policy expectations.
Fed Chair Kevin Warsh is faced with mounting evidence of inflation and a robust employment picture, which could lead to further rate hikes. Wall Street Journal journalist Nick Timiraos notes that the reading of CPI on Friday will be significant in shaping the Fed's decision.