US PCE Core Inflation Grew 4.7%, Market Concerned About Fed Rate Hike

Key Points:

• The US PCE core statistics support the notion of sticky inflation, increasing the possibility of more US Federal Reserve rate rises.
• However, Bitcoin prices did not have much movement after the news.

The Bureau of Economic Analysis announced the core personal consumption expenditures (US PCE) for the United States on Friday, which tracks price increases across a variety of consumer spending.

The PCE price index for April 2023 grew 0.4 percent from the previous month, while the PCE price index excluding food and energy increased 4.7% from a year earlier.

While the core PCE Index has a general influence on high-risk assets such as Bitcoin, the crypto market did not react much to the April inflation statistics. Nonetheless, market investors are anticipating the possibility of a debt limit agreement later today.

Inflation rose faster than predicted in April, giving the US Federal Reserve more reason to tighten monetary policy amid fears about a liquidity shortage in regional banks.

The Core PCE inflation statistics is one of the key variables analyzed by the US Federal Reserve when deciding whether to raise interest rates. The Federal Open Market Committee (FOMC) will hold its next meeting on June 13-14, 2023. Experts have warned investors to prepare for a Fed rate hike.

This is the first monthly rise in PCE inflation since October 2022, according to the statistics. It is vital to remember that this is the Fed’s favored metric for measuring inflation.

Analysts predict that interest rates will rise by 25 basis points in June. The likelihood of a trek in June is now 64.2%, with a 52.2% possibility of another trip in July. Nevertheless, investors might now anticipate a rate drop in November.

It also said that the market currently anticipates just one rate decrease in 2023. Before, investors expected approximately four cutbacks. Only two weeks ago, no additional rate rises were forecast. Meanwhile, there is a 70% chance of at least two additional raises.

The Bitcoin price has hardly moved from its current range of $26,700. In response to the PCE figures, US stock futures climbed marginally.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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