US PCE Inflation Comes in Hot At 2.6%, Will Traders Turn Cautious on Bitcoin Price?

The headline US PCE inflation has increased for the third month to 2.6%, reported the Bureau of Economic Analysis on Friday. Moreover, the core PCE inflation in the United States has unexpectedly steadied at 2.8% in December, the same as in November. Stocks and Bitcoin price are starting to rise again as analysts and investors are optimistic about further rally in the coming months.

Notably, the U.S. Federal Reserve revised its economic projections upward, raising the 2025 annual PCE inflation forecast to 2.5% from 2.1% and the core PCE inflation forecast to 2.5% from 2.2%.

US PCE Inflation Comes in At 2.6%

The U.S. Bureau of Economic Analysis released the Federal Reserve’s preferred inflation gauge US PCE data on January 31. The annual PCE comes at 2.6%, as expected, but up from 2.4% last month. Also, the month-over-month inflation rose 0.3% after a 0.1% increase in the previous month.

The annual core US PCE inflation jumps to 2.8%, in line with market expectations and the same as in the earlier month. The monthly core PCE comes in at 0.2%, up from 0.1% last month.

US Fed Takes Rate Cuts Off Table

The Federal Reserve paused interest rates on Wednesday, triggering an upside momentum in Bitcoin price and the broader crypto market. However, Fed Chair Jerome Powell said the FOMC is in no hurry to cut rates again, which got harsh comments from US President Donald Trump as he plans to push for rate cuts.

Fed Governor Michelle Bowman said she wants to see additional progress on inflation before the central bank lowers interest rates further.

CME FedWatch tool shows an 84% probability for the Fed to keep interest rates unchanged in the next FOMC meeting in March amid new inflation data, increasing uncertainty in the markets.

Bitcoin Price Drops

BTC price drops slightly by 0.5% after the PCE inflation data, with the price currently trading at $104,594. The 24-hour low and high are $103,912 and $106,418, respectively. Furthermore, the trading volume has decreased by 25% in the last 24 hours, indicating a decline in interest among traders amid uncertainty.

US dollar index (DXY) turns volatile and moves 0.43% high to 108.26 after PCE inflation data. Moreover, the US 10-year Treasury yield also slightly increased to 4.523%. Notably, Bitcoin price moves in the opposite direction to DXY and Treasury yield, but uncertainty has kept trades cautious about the market direction.