Fed’s Favorite Inflation Gauge Stays Hot in Belated Report - What It Means for Crypto

The Federal Reserve's preferred inflation measure just delivered a scorching update—and the report wasn't even on time. Forget whispers of rate cuts. This data screams 'hold steady' and throws cold water on any dovish pivot dreams.

The Core Problem Isn't Cooling

Markets were hoping for a chill. They got a reheating instead. The stubborn core numbers, the ones the Fed watches like a hawk, refused to bend. That means the central bank's main job—taming price surges—is far from finished. No quick exit from restrictive policy. No relief valve for traditional finance.

Digital Assets Don't Wait for Permission

While TradFi analysts dissect the lagging report, crypto markets operate on a different clock. Bitcoin's monetary policy is baked in—no committee meetings, no delayed data prints. This inflation persistence isn't just a headline; it's a live-use case for hard-capped, decentralized alternatives. It's the ultimate stress test for 'sound money' narratives.

The Cynical Take

Wall Street will spin this for fees—new volatility products, rebalanced portfolios, another round of analyst calls. The real story? A belated report confirming what your grocery bill already told you: the old system's gauges are as sluggish as its solutions.

The Fed stays in its box. Smart money looks for the exit. The door labeled 'crypto' just got a lot more crowded.

Key Takeaways

• Inflation in September showed a mixed trend with overall inflation accelerating and "core" inflation, which excludes food and energy, slowing down.
  
• The decrease in core inflation was unexpected and leaves the Federal Reserve on track to cut interest rates next week, putting the battle against inflation on the back burner in favor of helping stabilize the job market.
  

A seriously belated government report confirmed what you may already have known by looking at your grocery receipts: inflation stayed hot in September.

Consumer prices ROSE 2.8% over the 12 months through September as measured by the Personal Consumption Expenditures index, up from a 2.7% annual increase in August, the Bureau of Economic Analysis said Friday.

The rate was in line with forecasters' expectations. The report was originally due to be released in October, but had been delayed by the government shutdown. "Core" prices, which exclude food and energy, rose at 2.8% over the year, down from a 2.9% annual increase in August. It was the first decrease in Core inflation since April, and was lower than the 2.9% rise that forecasters had expected.

What This Means For The Economy

Inflation is still higher than the Federal Reserve's target, but the downtick in annual inflation in September takes some pressure off the Fed to keep interest rates higher for longer. Friday's inflation report could pave the way for a Fed rate cut next week, which was already widely expected.

The report is especially significant because the Federal Reserve uses PCE CORE inflation as its benchmark for whether inflation is running at its target of a 2% annual rate—it hasn't been since 2021.

Nevertheless, Fed officials are widely expected to cut the central bank's key interest rate next week, lowering borrowing costs to stabilize the faltering job market and putting the battle against inflation on the back burner. The deceleration in core inflation could ease some concerns among Fed officials about tariffs stoking inflation, and help cement a rate cut next week.

The data will "help them feel more confident about a third straight cut," Ali Jaffery, an economist at CIBC, wrote in a commentary.