US CPI rose at an accelerated pace in August, quickly heating up market expectations for interest rate hikes.
Gasoline prices rebounding after two consecutive months of declines, U.S. consumer prices accelerated in August, boosting financial market expectations that the Federal Reserve may raise interest rates next week.
The U.S. Bureau of Labor Statistics said Friday that the Consumer Price Index (CPI) rose 0.4% month-on-month in August, following a 0.1% increase in July. Consumer inflation rose 3.4% in the 12 months ending August, matching the July gain. August’s seasonally adjusted core CPI rose 0.3% month-on-month, exceeding the market forecast of 0.2%.
Data released Thursday showed the Producer Price Index (PPI) rose in August, with several key components posting strong gains—components that feed into calculations for Personal Consumption Expenditures (PCE) inflation. Combined with last week’s strong August jobs report, this has further lifted market expectations for a rate hike next week. Following the release of August’s CPI data, markets are pricing in roughly a 90% probability that the Fed will raise rates next week.
Some economists argue that price pressures will persist due to import tariffs—most recently those imposed on Canada, one of the U.S.’s largest trading partners. Discontent over rising prices, particularly gasoline and food costs, has led to a sharp drop in Trump’s approval rating and could cost his Republican Party control of Congress in the November midterm elections.
Fed Chair Walsh said last month that if policymakers fail to gain sufficient confidence that inflation is moving back toward the 2% target, the Fed still “has work to do.”
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After the CPI "dust settles" moment, global markets have rallied strongly: Bitcoin rebounded from a low to hit $78,000, and US stock index futures maintained their upward momentum.
Although U.S. August CPI rose at a faster pace, lifting rate hike expectations, with a roughly 90% probability of a Federal Reserve rate hike priced in for next week, and markets fully anticipating two additional Fed hikes by year-end, global markets still performed strongly after the widely expected move.
In the crypto space, per HTX market data, Bitcoin briefly plunged to $76,046 in a short-term flash dip, and has since rebounded to $78,000. Ethereum broke above $2,500.
In U.S. equities, per BIT (bit.com) market data, pre-market Dow Jones futures rose 0.8%, Nasdaq futures gained 0.82%, and S&P 500 futures advanced 0.73%.
Per Bitget market data, spot gold has rebounded more than $70 from its post-CPI low, breaking above $4,360 per ounce, after earlier touching a low of around $4,290 per ounce.
8 minutes ago
Bitcoin surges past $78,000, posting a 1.14% gain in the past 24 hours.
According to HTX market data, Bitcoin has surged past $78,000, with a 1.14% gain over the past 24 hours.
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US core CPI monthly rate hits its highest level since May this year
The seasonally adjusted core CPI monthly rate for the U.S. in August came in at 0.3%, the highest level since May this year, exceeding the market expectation of 0.2% and matching the prior reading of 0.2%. The unadjusted core CPI year-over-year rate fell to 2.4% in August, marking three consecutive months of decline and hitting its lowest level since April 2021, in line with expectations, down from the prior value of 2.5%.
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US CPI monthly rate hits new high since June this year.
The US August unadjusted CPI month-on-month rate came in at 0.4%, the highest since June this year, in line with expectations, versus the prior reading of 0.1%. The US August unadjusted CPI year-on-year rate stood at 3.4%, meeting expectations and unchanged from the previous figure.
8 minutes ago
After the release of CPI data, spot gold fell below the $4,300 per ounce mark.
According to Bitget's market data, spot gold plunged more than $50 in a short period after the release of CPI data, falling below the $4,300 per ounce mark.
8 minutes ago
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