Breaking: PCE Data Comes In at 2.6%, BTC Price Reacts

The July PCE data came out in line with expectations, rising to 2.6% year-over-year (YoY), a development that sparked a rebound in the BTC price. This bounce was short-lived as the flagship crypto has since dropped to new intraday lows.

July PCE Data Rises To 2.6% YoY, BTC Price Climbs

Bureau of Economic Analysis data showed that the July PCE inflation rate rose to 2.6%, similar to the rate recorded in June. Meanwhile, the monthly data came in at 0.2%, also in line with expectations and lower than the June data of 0.3%.

Core PCE data also rose to 0.3% month-on-month (MoM) and 2.9% YoY, both in line with expectations. The Fed’s preferred inflation gauge has provided a bullish outlook for the BTC price and the broader crypto market, as it indicates that inflation remains steady.

TradingView data shows that the Bitcoin price surged following the PCE data release. The flagship crypto sharply broke above $110,000 and rose to as high as $110,700. This uptrend didn’t last long as Bitcoin has now dropped to a new intraday low of around $109,000.

BTC remains at risk of dropping to new lows as whales continue to take profits. However, the PCE data is undoubtedly bullish, considering how the inflation data could positively impact the September FOMC decision.

Fed Chair Jerome Powell had already signaled that a rate cut might be necessary, as the downside risk to employment is rising, although the inflation risk still exists. However, this data release suggests that inflation remains in a favorable position and that the Fed’s primary focus should be on the softening labor market.

Traders Still Fully Pricing In A September Rate Cut

CME FedWatch data shows that traders are still fully pricing a September Fed rate cut following the release of the July PCE data. There is currently an 87.2% chance that the U.S. Central Bank will make a 25 basis points (bps) cut at the next FOMC meeting.

Besides Powell, other FOMC members, such as New York Federal Reserve President John Williams, have suggested that they might be open to a rate cut in September. Williams said he will support a Fed rate cut based on the incoming data.

Meanwhile, Fed Governor Chris Waller has explicitly said that he would vote in favor of a 25-bps rate cut at the September 17 meeting. Waller also opened the door to a 50 bps cut if the August nonfarm payrolls data comes in weak.