U.S. Core Inflation Rose 0.3% in August, Leading to Rate Cut Speculation

U.S. core inflation rose 0.3% in August, faster than expected, likely leading to a 25 basis point Fed rate cut next week. CPI rose 2.5% year-over-year, while core CPI was 3.2%.

Expectations for the Fed to cut rates by 25 basis points next week jumped to 85%. The dollar index rose 0.15% and gold price dipped 0.45%.

Bitcoin, U.S. stocks, and Treasury yields fell following the report. The consumer price index for August increased by 0.2%, while core inflation remained steady at 3.2%.

The Federal Reserve may exercise patience in lowering borrowing costs due to the steady core prices. The inflation rate in the U.S. dropped to 2.5% in August, its lowest since 2021, with the gas and food prices being contained.

However, the underlying inflation rate remains at 3.2%, indicating ongoing efforts to control prices. The report matched economists' expectations, but the market reaction was mixed.

US stock futures fell as investors assessed August inflation data, with core prices rising more than expected, reducing odds of a 50 basis points Fed rate cut. Bitcoin prices may drop by up to 20% if the Fed cuts interest rates, according to Bitfinex analysts.