The Bureau of Economic Analysis released long-delayed September PCE inflation data showing headline PCE at 2.8% year-over-year, matching expectations and ticking up from 2.7% in August. Core PCE—the Fed’s preferred inflation gauge—improved to 2.8% from 2.9%, beating the 2.9% forecast.
Bitcoin held steady around $92,000 on the release, with the in-line data keeping December rate cut odds anchored at 86% for the Fed’s December 9-10 FOMC meeting.
The core PCE decline is encouraging for dovish policymakers, though the headline increase shows inflation remains above the Fed’s 2% target.
Coming on the heels of today’s shockingly strong jobless claims (191K vs 219K expected), the Fed faces conflicting signals—inflation cooling gradually but employment showing unexpected resilience.
Alternative data provider Truflation noted the disconnect between the delayed September official data and current conditions, reporting their real-time PCE at just 2.13% and core PCE at 2.6% using “millions of price data points from real purchases, as opposed to surveyed prices.”
The gap highlights the challenge facing Fed Chair Powell—September’s data is already two months old, collected before the government shutdown, and may not reflect current economic conditions.
Markets are now weighing whether improving core inflation (2.8% vs 2.9%) combined with QT that ended December 1 justifies a rate cut, or whether today’s robust labor market data (191K jobless claims, lowest since 2022) argues for patience.
Bitcoin’s muted reaction suggests crypto traders are taking a wait-and-see approach into next week’s blackout period before the December 9-10 Fed meeting.
The technical setup shows resistance at $93,000 and the descending trendline that’s capped rallies since November 11, with support holding at $92,000.
The total crypto market cap sits at $3.1 trillion as traders weigh whether the combination of cooling core inflation and strong employment creates the “goldilocks” scenario for risk assets, or whether the Fed interprets resilient labor markets as justification to pause easing.
With core PCE moving in the right direction but still 80 basis points above target, the December rate cut remains probable but not guaranteed—especially if policymakers view today’s 191K jobless claims as evidence the economy doesn’t need additional stimulus.
PCE Inflation Meets Expectations: Fed Gets Mixed Signals
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