US PCE Eases Pressure for October Rate Hike, Giving Bitcoin Room to Breathe

The US Personal Consumption Expenditures (PCE) inflation gauge showed softer-than-expected readings in August, easing pressure for an October rate hike. This could create a more supportive backdrop for risk assets like Bitcoin.

According to The Block, the PCE index rose 0.3% in August from the previous month and 3.4% from a year earlier. Core PCE, which excludes volatile food and energy prices, increased 0.2% on the month and 3% from a year earlier.

Brendan Ahern, head of investment strategy at the Arbitrum Foundation, said the 0.2% monthly increase in core PCE was welcome news for the Fed. If September's consumer price index points in the same direction, pressure for an October rate increase would ease.

Markets are watching whether the softer inflation trend will reduce the risk of additional Fed tightening and lift sentiment toward digital assets. Martin Lee, head of market insights at DWF Labs, said Bitcoin volatility remains near its lowest level of the year and options skew is broadly neutral.