Bitcoin Falls Below $83,000 as US Inflation Hits 3.7% and Fed Rate Hike Odds Rise
Bitcoin fell below $83,000 after September US inflation data came in hotter than expected, raising concerns that the Federal Reserve could maintain a restrictive monetary policy or consider further interest rate increases. The latest figures have also shifted market expectations ahead of the Fed's October 27-28 meeting, with traders assigning a nearly even probability to a 25-basis-point rate hike.
The US Consumer Price Index (CPI) rose 3.7% year over year in September, reaching its highest level since May, according to the reported data. Core inflation also exceeded market expectations, adding to concerns that price pressures could make it more difficult for policymakers to ease monetary conditions.
The inflation report has put the Federal Reserve's next policy decision under renewed scrutiny, with cryptocurrency investors watching whether higher borrowing costs could continue to weigh on Bitcoin and the broader digital asset market.
US Inflation Raises Questions About Fed Rate Policy
The acceleration in annual CPI inflation to 3.7% has strengthened expectations that the Federal Reserve may adopt a more restrictive policy stance. Higher-than-expected headline and core inflation figures could complicate the central bank's efforts to bring price pressures under control.
Bloomberg macroeconomist Chris Anstey said the latest data suggested that the September rate increase might not be an isolated event. However, recent comments from Federal Reserve officials indicated that policymakers were not preparing for a series of rate hikes in October.
Anstey's assessment was that the September inflation report, despite exceeding expectations, might not be sufficient on its own to trigger another increase at the October meeting. Nevertheless, the figures could reinforce expectations that the Fed will maintain a tighter policy stance, making another rate increase more plausible over time.
CME FedWatch Shows October Rate Hike Odds Near 50%
Following the September CPI release, market pricing tracked by CME's FedWatch tool showed a 50.7% probability that the Federal Reserve would leave interest rates unchanged at its October meeting. The probability of a 25-basis-point increase stood at 49.3%.
The figures indicate that traders were nearly evenly divided between an unchanged policy rate and another quarter-point increase. The probabilities reflect market expectations rather than a confirmed decision by the Federal Reserve.
For December, CME FedWatch pricing showed a 3.5% probability of no change in interest rates, a 50.6% probability of a 25-basis-point increase and a 45.9% probability of a 50-basis-point increase.
These expectations highlight the uncertainty surrounding the Fed's policy path as investors assess whether persistent inflation will require additional monetary tightening.
Bank of America Forecasts Three More Rate Hikes
Bank of America analysts have also updated their outlook for Federal Reserve policy. CNBC reported that the bank expects the central bank to raise interest rates three more times by June 2027.
The forecast points to the possibility of a prolonged period of tighter monetary policy if inflation remains a concern. However, the projection represents Bank of America's outlook and does not establish what the Federal Reserve will ultimately decide.
Bitcoin Traders Watch the October Fed Meeting
Bitcoin dropped below $83,000 following the inflation report, as attention shifted toward the Federal Reserve's October 27-28 policy meeting. The latest figures have added another source of uncertainty for cryptocurrency markets, which are sensitive to expectations surrounding interest rates and financial conditions.
Whether the Fed raises rates again will depend on policymakers' assessment of inflation and the broader economic outlook. For Bitcoin and other digital assets, the direction of monetary policy remains a key factor investors are monitoring as the market reassesses the likelihood of further tightening.
data source:en.bitcoinsistemi.com
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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