What To Expect From Friday’s Inflation Report: The Crypto Market’s Next Catalyst

Friday's inflation numbers aren't just another data point—they're the trigger for the next big move in digital assets.

The Fed's Dilemma, Crypto's Opportunity

Markets hold their breath. A hot print means more hawkish talk, pushing traditional investors toward the exits. But for crypto? That's just another day. The decentralized finance world doesn't wait for central bank permission slips. It operates on a different clock—one measured in block times, not Fed meeting minutes.

Inflation's Real Impact: A Flight to Hard Assets

Persistent inflation erodes fiat purchasing power. Savvy capital knows this. It's already moving, seeking shelter in assets with verifiable scarcity. Bitcoin's fixed supply isn't a feature; it's the ultimate hedge against monetary policy gone wobbly. While Wall Street analysts parse tenths of a percentage point, the smart money is quietly rebalancing portfolios toward digital gold and its high-beta cousins.

Beyond the Headline Number

Forget the consensus forecast. The real action is in the market's reaction function. A 'good' number might bring a temporary relief rally in stocks, but crypto's momentum is structural. It's fueled by adoption, innovation, and a growing distrust in legacy financial plumbing. The report might dictate the short-term volatility, but the long-term trajectory? That's being written on-chain.

The Bottom Line for Traders

Expect noise. Expect overreactions. Then, watch where the liquidity flows. History shows that macroeconomic uncertainty doesn't break crypto; it reveals its value proposition. While traditional finance frets over basis points and the Fed's 'dot plot,' the DeFi ecosystem just keeps building—offering yield, ownership, and an exit from a system that thinks 2% inflation is a policy victory. Let that sink in.

Key Takeaways

• Core PCE inflation, the Fed's preferred gauge of consumer price increases, likely rose 2.9% in September, heading in the wrong direction from the Fed's goal of a 2% annual rate.
  
• Although Fed officials are worried about simmering inflation, they are expected to cut interest rates anyway next week to help the faltering job market.
  

The Fed's preferred measure of inflation likely kept sizzling in September.

A report scheduled for release on Friday is expected to show that inflation, as measured by the Personal Consumption Expenditures index, rose 2.8% over the 12 months ending in September, up from 2.7% in August according to estimates by RBC Bank among others. That WOULD be the highest since April 2024. "Core" inflation, which excludes volatile prices for food and energy, likely rose 2.9% over the year, the same as in August.

If the report matches expectations, it would mark 55 months since core PCE inflation—the price measure preferred by officials at the Federal Reserve—was higher than the Fed's target of a 2% annual rate.

Inflation surged during the pandemic, peaking in 2022 and subsequently falling toward the Fed's target. But President Donald Trump's tariffs have pushed up prices again this year, as merchants pass the cost of the import taxes on to consumers.

What This Means For The Economy

Inflation has been a thorn in the side of the economy since 2021 and forecasters don't expect it to return to pre-pandemic levels anytime soon.

Friday's report was initially scheduled for October, but was delayed by the government shutdown. If it matches expectations, PCE inflation would have the same annual increase as the more widely-watched Consumer Price Index for September. The two price measures often MOVE in the same direction, although they often show slightly different inflation rates.

Forecasters expect inflation to remain above target for months, if not years, to come. Economists at Bank of America, for example, expect core PCE inflation to stay over 3% through the third quarter of 2026 and over 2% through 2027, according to a commentary published Wednesday.

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Stubborn inflation, however, may not deter the Fed from cutting its benchmark interest rate at its meeting next week. Although the Fed officials have kept rates high to discourage borrowing and quell inflation, they also face pressure to cut rates to encourage hiring and help out the increasingly shaky job market. The Fed cut its benchmark interest rate by a quarter-point at each of its last two meetings and is widely expected to do so again.

Fed officials have said they see risks on both halves of its dual mandate from Congress to keep inflation low and employment high, and the two goals are pulling interest rates in opposite directions. A recent slowdown in job growth has given the rate-cutters the upper hand in the debate.