A U.S. government report revealing that an inflation index closely watched by the Federal Reserve increased more slowly than anticipated last month gave Bitcoin a quick lift early on Friday. The PCE price index grew 0.3% in September, which was less than the 0.4% growth in August. Additionally, the gain was lower than the 0.4% average expectation of economists surveyed by FactSet.
In the minutes following the revelation, the price of Bitcoin (BTC) increased by more than $150, reaching $20,284. At the time of publishing, some of the gains had already been lost, and the biggest cryptocurrency was trading for about $20,279.20.
Recent movements in Bitcoin and other risky assets have been driven by anticipation that the Federal Reserve may soon scale back its efforts to combat the country’s skyrocketing inflation. In an effort to decelerate the rate of consumer price increases, the Fed has been tightening monetary policy; higher interest rates often make risky assets less alluring.
The PCE index has increased by 6.2% over the previous 12 months, which is identical to the rate for August and is still much higher than the Fed’s 2% target.
According to the most current CPI report, which was released on October 13, the index unexpectedly increased more quickly than forecast in September, at a rate of 8.2%, nearly reaching the highest level in four decades. After that report, the price of bitcoin decreased.
The Consumer Price Index, a different measure of inflation issued by the Bureau of Labor Statistics of the Labor Department, is generally released a few weeks before PCE each month and is considerably more closely followed by economists and the general public.