Breaking: U.S. PCE Inflation Cools to 2.8%, Lower Than Expected

The U.S. PCE inflation data, the Fed’s favorite inflation gauge, has come in lower than expectations. This data release comes just ahead of next week’s FOMC meeting, where the Fed is likely to hold rates steady. Meanwhile, Bitcoin extended its gains today on the back of this inflation data.

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PCE Inflation Falls To 2.8% In January

Bureau of Economic Analysis data shows that the Personal Consumption Expenditures (PCE) index increased by 2.8% year-over-year (YoY) in January, below estimates of 2.9%. The index increased 0.3% month-over-month (MoM), in line with estimates.

Meanwhile, the Core PCE inflation data came in at 3.1%, in line with expectations and close to a two-year high. MoM, the Core PCE increased 0.4%, also in line with expectations. Notably, PCE fell from the 2.9% recorded in December last year, but Core PCE rose from 3.0% recorded that same month.

As such, inflation is likely to remain a concern for the Fed, especially as core PCE remains well above its 2% target. This data comes ahead of next week’s FOMC meeting, where the Fed is likely to hold interest rates steady, despite calls from President Trump for an emergency rate cut.

Bitcoin rose above $73,000 after the release of PCE inflation data, extending its gains today. TradingView data shows that the leading crypto is currently trading at around $73,800, up over 4% today.

As CoinGape reported, the Bitcoin price hit $72,000 earlier in the day amid massive buying in the derivatives market. BTC also climbed on the back of fresh inflows into the Bitcoin ETFs, which took in $54 million yesterday.

However, Bitcoin and the broader crypto market still face pressure due to the U.S.-Iran war, which crypto traders are now pricing could last until May. The ongoing conflict is the reason for the rising oil prices, which threatens to drive inflation higher.

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Traders Increase Bets On One Rate Cut

Polymarket data show that crypto traders have increased their bets on the Fed making at least one rate cut this year, following the release of PCE inflation data. The odds of one Fed rate cut have jumped from around 28% to 31% today.

Meanwhile, there is a 26% chance that the Fed will make two rate cuts this year. As CoinGape reported, Goldman Sachs delayed its Fed rate-cut forecast from June to September, predicting the Fed will make the first cut in September and another in December.

Macro expert Brent recently opined that Fed Chair nominee Kevin Warsh is unlikely to push for a rate cut if he succeeds Jerome Powell in May. The expert made this comment after Trump called for an intermeeting rate cut yesterday.

Still think Warsh won’t push for rate cuts at his first meeting and gleefully cut with a 1 vote majority if that’s all he gets? (Note: It will likely be unanimous and may be >25bps). pic.twitter.com/d6t8wuUzMX

— Brent aka Blacklion (@BlacklionCTA) March 12, 2026