Bitcoin Surges Past $85,000 as US Inflation Rate Cools to 3.4%

The US inflation rate cooled to 3.4% in August, below forecasts of 3.7%, according to new data released by the Federal Reserve.

This development had a significant impact on financial markets, with Bitcoin surging past $85,000 within an hour and gold prices jumping about $20.

The Fed's preferred inflation gauge, personal consumption expenditures (PCE), rose 3.4% from a year earlier, which is well below the expected rate of 3.7%. Core PCE, which strips out volatile food and energy costs, increased by 3.0%, also lower than the predicted 3.3%.

The lower inflation reading reduces the likelihood of an October rate hike by the Federal Reserve, with traders previously giving a 72.5% chance of such an event. The reduced probability may have contributed to the surge in Bitcoin and gold prices.