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Crypto Potato 2025-03-02 17:26:54

PCE Inflation Fell – Could This Spell Trouble for Bitcoin’s Price?

PCE inflation is the core Personal Consumption Expenditures index updated by the US Bureau of Economic Analysis. Financial media outlets often refer to the Bureau of Labor Statistics’ Consumer Price Index (CPI). But, the Federal Reserve favors the PCE for the economic analysis involved in its decision-making process. Inflation in US prices across the core consumer basket rose a modest 0.3% from December to January, just as forecasters expected. Meanwhile, the inflation report even fell from a year-over-year point of view. That could be more bad news for Bitcoin prices that are already in jeopardy. Powell: Fed in No Rush to Print As a result of the tepid growth in US consumer prices that has accompanied an abrupt pullback in consumer spending, the Fed has room to consider moving interest rates further down the scale. The effective federal funds rate currently stands at 4.33%, one percent lower than the 2024 and 2023 levels. The correlation between lower interest rates and support for massive multi-month Bitcoin price rallies is historically very strong. But, Federal Reserve leaders like Chair Jerome Powell have indicated that the central bank is taking a wait-and-see approach. The Fed is in no hurry to lower rates. Powell told Congress in testimony earlier in February, “We’re in a pretty good place with this economy.” “We want to make more progress on inflation,” he said. “We think our policy rate is in a good place and we don’t see any reason to be in a hurry to reduce it further.” Did Bitcoin Tame The Dollar? The new White House and SEC are ardently accommodating to the crypto sector, but even the non-partisan, non-government Federal Reserve has taken a softer tone on crypto assets like Bitcoin in recent times. While speaking to Congress, Powell said, “Banks are serving crypto customers. We don’t want to get in the way of banks serving perfectly legal customers.” Fed Chair says banks can serve ‘perfectly legal’ cryptocurrency READ: https://t.co/Sxq9D1uQNq pic.twitter.com/psCidk3OHM — Washington Examiner (@dcexaminer) February 12, 2025 The Federal Reserve steers the monetary system between the extremes of deflationary debt revaluation and crushing price inflation. Bitcoin issues more currency in addition to the dollar, giving the Fed some cushion against the former. At the same time, it rewards long-term holders for saving their money instead of consuming it, giving the central bank some more room with interest rates when it comes to consumer price inflation. These are critical factors in Bitcoin’s price, but the world’s first and most secure cryptocurrency now exists on such a scale that the US government is carefully studying its macro impacts. The post PCE Inflation Fell – Could This Spell Trouble for Bitcoin’s Price? appeared first on CryptoPotato .

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