Markets are already pricing in some of this. The dollar index is approaching 98, while Bitcoin and stocks have limited room to move. Major investors appear to be waiting for the data before taking new positions.

Wall Street Banks Expect Limited but Crucial Inflation Increase

JPMorgan forecasts a 0.37% monthly rise in both headline and core PCE. While this seems modest, it translates into a notable annual effect, lifting core PCE to 2.9%. November’s rate was 2.8%.

Bank of America, Morgan Stanley, and Barclays expect core inflation to rise 0.39–0.40% monthly, with an annual rate around 3%. Goldman Sachs, Citi, and UBS forecast smaller increases, but the overall picture is the same: the downward trend in inflation is slowing.

This is critical because core PCE is a primary reference for the Fed’s monetary policy.

Rate Cut Expectations Are Moving Further Out

If inflation rises as expected, the Fed may remain cautious about rate cuts. Recent strong employment data and resilient economic activity already reduce the likelihood of an early cut.

Futures indicate about a 48% chance of a June rate cut, while most Wall Street institutions see the first cut more likely in July. This adjustment is gradually recalibrating short-term liquidity expectations.

Bitcoin and Global Markets Trade in a Narrow Range

Crypto markets are similarly cautious. Bitcoin traded between $65,637 and $67,456 in the last 24 hours. Price hovering around $67,000 reflects investor caution ahead of macro data.

Trading volume is low, and options expiration is approaching, keeping volatility subdued. After the data, market direction is expected to clarify.

The stronger dollar and delayed rate cut expectations are key factors applying short-term pressure on risk assets, but the outlook is not one-sided.

The Big Question: Is Inflation Rising Again?

The PCE report will provide the first clear answer. If core inflation reaches 2.9%, the Fed may postpone cuts further, delaying liquidity expectations.

Market reaction often reflects uncertainty more than the direction itself. Once clarity arrives, even a neutral or slightly negative outcome could ease tensions.

Micro Data Block

• JPMorgan core PCE forecast: 0.37% (monthly)

• Wall Street forecast range: 0.37–0.40% (monthly)

• Expected annual core PCE: 2.9–3.0%

• Bitcoin 24-hour range: $65,637 – $67,456

• Dollar index: near 98

The US PCE inflation report will shape both the macro outlook and the Fed’s policy path. With major Wall Street banks revising forecasts upward, the slowdown in inflation is showing signs of stalling. Market volatility for Bitcoin, equities, and the dollar may rise immediately after the release. Rate cut timing remains the main driver of risk appetite.

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The Producer Price Index (PPI) data will be published on August 14. PPI is the last key metric to guide the Fed’s monetary policy outlook. The Fed has kept interest rates unchanged. In addition, expectations for a rate cut in September remain in place. These figures will play a role in shaping the possible decision. On the same day, US jobless claims will also be announced, with expectations at 220K compared to the previous 226K. 

Jackson Hole, Trade Tensions, and Company Developments 

The Jackson Hole Economic Symposium will be held from August 21 to 23. Organized by the Kansas City Fed, the event will bring together central bank governors, economists, and financial leaders. Fed Chair Jerome Powell’s remarks at the event are expected to influence market sentiment. 

In the crypto space, on August 11, Binance will delist $DEFI and $MEMEFI futures contracts. On August 12, Stellar (XLM) will publish its Q2 2025 report. Meanwhile, Orca DAO’s vote on using 55,000 Solana from its treasury for $ORCA buybacks will end the same day. 

On August 14, Lido (LDO) will hold a forum discussing its roadmap and long-term plans. On August 15, three significant events will take place. In the US, Donald Trump will meet Vladimir Putin in Alaska. FTX will make new payments to creditors as part of its bankruptcy process. In addition, SharpLink Gaming, dubbed the “MicroStrategy of Ethereum,” will release its earnings report 

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Hassett’s Message on Rate Cuts Is Clear

Kevin Hassett’s comments represent an alternative economic perspective to the Fed’s current policy stance. According to Hassett:

• Inflation is under control.

• The labor market remains strong.

• Conditions are suitable for a rate cut.

He believes that the Fed should take more decisive steps, especially considering global economic trends.

Hassett: “Fed official Waller and Trump are right about interest rates. There is no reason why the Fed shouldn’t cut rates.”

Why Is Powell Holding Back?

Fed Chair Jerome Powell, however, has a different outlook. Powell warns that external factors such as rising oil prices and new tariffs could drive inflation higher in the near future. In particular, the surge in energy prices is believed to put upward pressure on the Consumer Price Index (CPI).

Because of these concerns, the Fed is taking a cautious stance toward a potential rate cut in September. However, market expectations differ: According to CME Group data, investors see a 76% probability of a rate cut in September.

Global Trend: Other Central Banks Have Started Cutting Rates

Another point supporting Hassett’s view is the global approach of other central banks. Major institutions like the European Central Bank (ECB) and the Bank of Canada (BoC) have already begun reducing interest rates.

If the U.S. lags behind this trend, the dollar could strengthen further, which might harm the competitiveness of U.S. exporters. This strengthens Hassett’s message: “Now is the time to act.”

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In May, the U.S. Consumer Price Index (CPI) rose by just 0.1% month-over-month and 2.4% annually—below the expected 2.5%. Core CPI, excluding food and energy, also came in at a softer 2.8%. Declines in energy, vehicles, and apparel prices contributed to the subdued inflation print, helping to ease concerns over runaway inflation.

Pressure on the Fed to Cut Rates Grows

This weaker-than-expected inflation reading reignited speculation that the Federal Reserve could cut interest rates in the near future. President Donald Trump and Vice President JD Vance publicly urged the Fed to take action and lower rates, calling the current monetary stance overly restrictive.

The dovish outlook and easing inflation boosted risk appetite across markets, pushing Bitcoin above the $110,000 mark. Many crypto investors see this macro backdrop as a potential catalyst for the next bullish cycle.

Moreover, with real wages rising and inflation pressures easing, digital assets are increasingly seen as attractive alternatives to traditional investments. Market participants are now closely watching upcoming Fed comments and macroeconomic data for further confirmation of a rate cut trajectory.

Bitcoin Surpasses $110,000

Bitcoin’s breakout not only reflects favorable economic conditions but also growing investor confidence and positive sentiment in digital asset markets.

If inflation remains tame and the Fed turns more accommodative, Bitcoin’s upward momentum may continue well into the summer.

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Core Inflation and Fed Interest Rate Expectations  

Federal Reserve officials and market participants are closely monitoring the impact of this inflation increase on interest rate policies. Members of the Federal Open Market Committee (FOMC) have previously indicated that they may delay rate cuts if inflation remains higher than expected. For instance, Fed Chair Jerome Powell recently stated, “Controlling inflation remains our priority.”  

Following May’s data, the likelihood of a rate cut in June has significantly diminished. According to the Kalshi prediction platform, rate cut expectations have dropped sharply. This shift has affected investors’ risk appetite, causing new volatility in financial assets.  

Liquidity and Inflation Reaction in Crypto Markets  

Global liquidity growth has fueled gains in cryptocurrency markets. Experts note that Bitcoin rose 4% to $110,000, moving in sync with the increase in M2 money supply. Other cryptos like Ethereum and Solana also saw similar gains. Analysts highlight that Bitcoin tends to follow changes in M2 money supply within a 71-day cycle.  

Investors eagerly await the June 11 CPI report. This data will reveal whether inflation is persistent and what path the Fed will take. Markets expect interest rates to remain around 425-450 basis points. However, inflation continues to rise. In this environment, the Fed prefers to wait before cutting rates. Federal Reserve officials, especially Chair Jerome Powell and St. Louis Fed President Alberto Musalem, have indicated they would not consider rate cuts if inflation becomes persistent.  

Traditional assets such as bonds and stocks could remain pressured due to inflation. Meanwhile, cryptocurrencies continue to benefit from increased global liquidity, deepening the divergence between markets.  

In summary, today’s US CPI report will be the most critical data guiding the markets.  

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What Is the Core PCE Price Index?

The Core PCE came in at 2.5% year-over-year. This figure is fully in line with market expectations and indicates a slight decline compared to the previous reading of 2.7%.

The fact that it is getting closer to the Fed’s inflation target of 2% shows that the tight monetary policy is having an effect. Especially during a period of increasing expectations for rate cuts, such data is highly important for market direction.

How Did the Market React?

The data coming in line with expectations was not a surprise for the markets. As a result, limited movements were observed in the dollar index initially, while partial recoveries were seen in gold and cryptocurrency markets. Expectations for rate cuts remain cautiously intact.

As core inflation in the US continues its downward trend, the possibility of a rate cut by the Fed later in the year remains on the table. However, this slow progress in the data indicates that a “cautious approach” will likely continue.

Why Is the PCE Data Important?

Core PCE is the inflation gauge that the Fed primarily uses in shaping its interest rate policies. By excluding food and energy prices, this index reflects the underlying trends in inflation. That’s why investors closely monitor this data to determine direction in the dollar, stocks, gold, and especially the cryptocurrency markets.

This content does not constitute investment advice. Markets involve high risk, and it is important to conduct your own research before making investment decisions.

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CPI Figures Fall Below Expectations

According to data released on May 13, US Core CPI (MoM) came in at 0.2%, below the expected 0.3%. Headline CPI (MoM) also recorded 0.2%, again below the 0.3% forecast. On an annual basis, CPI (YoY) was reported at 2.3%, slightly under the previous and expected value of 2.4%.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

These results suggest a controlled deceleration in inflation, potentially reducing the pressure on the Federal Reserve to maintain a hawkish stance.

Bitcoin And Ethereum React Quickly

Immediately after the release, Bitcoin rose from 103,300$ to 104,000$, while Ethereum (ETH) climbed from 2,500$ to 2,530$. The market’s swift reaction underscores how closely crypto assets are tied to macroeconomic expectations, particularly around interest rate policy.

The move also reinforces the narrative of Bitcoin and Ethereum being viewed as hedges against inflation.

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US Producer Price Index (PPI) Released!

The US Producer Price Index (PPI) announced today came in below market expectations, at 2.7%. The expectation was 3.3%. This figure indicates that producer prices increased at a lower rate than expected on a year-over-year basis.

PPI is considered an important indicator of how inflation is shaping at the producer level. This data could potentially put pressure on consumer prices and, therefore, provide key insights into the Fed’s monetary policy.

The PPI data, which came in below expectations, can be interpreted as a signal that inflation is under control. This could create some optimism in the market regarding the possibility of interest rate cuts. However, it’s important to note that a single data point is not sufficient to form a definitive view on broader economic conditions.

The 2.7% PPI figure offers somewhat relieving news for the markets, but there are many other factors that will influence the Fed’s future decisions. Tariffs and potential updates could lead to changes in the data. Therefore, investors should be patient and wait for more data regarding inflation and interest rates before making decisions.

This content is not intended as investment advice. The markets are high risk, and it is important to conduct your own research before making investment decisions.

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US CPI Falls Below Expectations

The annual CPI for March was announced at 2.4%. This figure came in below the market expectation of 2.5%, and also marked a decline from the previous value (2.8%). The monthly CPI was expected to rise by 0.1%, but instead came in at -0.1%. This indicates a weakening in short-term price pressures.

This slowdown in inflation could reshape expectations regarding the interest rate policy of the Federal Reserve (Fed). Especially the monthly figure falling into negative territory may be interpreted by markets as a dovish signal.

Unemployment Claims Remain Stable

During the same period, the unemployment claims data came in at 223K, aligning with expectations. Although the previous week’s figure was 219K, this slight increase does not indicate a major deterioration in the labor market.

The released data signal a softening in inflation while showing that stability in the labor market has been preserved. This balanced outlook may provide the Fed with flexibility in its monetary policy decisions.

This content does not constitute investment advice. The markets involve high risk and it is important that you do your own research before making any investment decisions.

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“Bitcoin is like gold — a scarce asset — but it’s also undergoing an adoption curve,” Back stated, despite a 30% correction from its all-time high above $109,000.

Inflation May Stay at 10–15% for a Decade

Back projected that inflation could remain at 10% to 15% for the next ten years, which he said is a level of investment return difficult to match with stocks or rental properties.

“Eventually, printed money flows into hard assets. Over time, they’ll all go up — especially scarce and physical assets like housing or Bitcoin,” he explained.

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While the Federal Reserve Bank of Cleveland projects a 2.18% average annual inflation over the next decade, the University of Michigan reports that consumer expectations are significantly higher — around 5% for next year and 4.1% over the next five years.

Politics, ETFs Fueling Bitcoin’s Momentum!

Beyond economics, Back highlighted how recent spot Bitcoin ETF approvals and a more crypto-friendly Trump administration are also boosting Bitcoin adoption.

“Trump’s presidency has begun removing anti-crypto regulations like Operation Chokepoint 2.0. That’s creating opportunities for retail investors,” he said.

On March 7, Trump signed an executive order to establish a Bitcoin reserve seeded with coins seized in criminal investigations — a move hailed by many as a significant step toward integrating Bitcoin into the mainstream financial system.

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