Traders now watching Bitcoin and the broader crypto market as fresh inflation data triggers questions about where U.S. monetary policy is headed next.
The latest report shows that Core PCE, the Federal Reserve’s preferred measure of underlying inflation, rose by 0.2% in May, coming in slightly above the 0.1% economists had predicted. Notably, on an annual basis, core prices climbed 2.7%, also higher than the 2.6% forecast.
These figures suggest that inflation isn’t cooling as smoothly as many had hoped, and that could slow down any plans the Fed might have had to cut interest rates.
For context, core PCE strips out food and energy prices, making it a more stable gauge of inflation. While headline inflation stayed in line with expectations, up 0.1% MoM and 2.3% year-over-year, the firmer core numbers show that price pressures remain sticky in the broader economy.
Bitcoin Holds Steady Despite Hotter Core PCE Figures
Essentially, this makes it harder for the Fed to justify cutting rates any time soon, especially as it keeps a close eye on inflation trends before making its next move.
However, even with the hotter-than-expected inflation reading, Bitcoin has held up well. It slipped briefly after the report, falling 0.29% and dropping just below $107,000.
Nonetheless, the dip didn’t last. Bitcoin quickly bounced back and is now hovering around $106,951. If it manages to close the day above $107,000, it could turn that level into a short-term support base, which might help cushion the blow if selling pressure picks up again.
Crypto traders are watching inflation numbers because they tie directly into the Fed’s approach to interest rates. Higher inflation typically leads to tighter monetary policy, which can weigh on risk assets.
However, Bitcoin’s strong performance suggests many investors are still confident in its long-term role, whether as a hedge against inflation or a store of value.
No Interest Rate Cuts Soon
Recent comments from top policymakers and financial figures also suggest rate cuts might not be coming in soon. On June 24, Federal Reserve Chair Jerome Powell told lawmakers that the Fed plans to pause and take more time to evaluate incoming data before making any rate changes.
He highlighted that new tariffs could drive prices higher and said the Fed wants to see how that plays out in upcoming reports.
Atlanta Fed President Raphael Bostic made similar comments. He said the Fed should wait before easing policy and predicted just one rate cut late in the year. Bostic pointed to rising costs from tariffs and ongoing strength in the job market as reasons for holding steady.
Meanwhile, President Donald Trump repeated his calls for the Fed to lower rates significantly, criticizing Powell’s leadership. Vice President JD Vance also accused the central bank of mishandling the situation by not easing policy after inflation cooled slightly in May.
Some market analysts believe that traders may be expecting too much too soon when it comes to rate cuts. They argue that unless Powell is replaced when his term ends in May 2026, the Fed is likely to stick with its cautious stance.
Others warn that ongoing tariff pressures could keep inflation stuck around 3%, which raises concerns about stagflation—a mix of sluggish growth and high prices.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
