Key facts
- US PCE inflation rose 3.7% year-over-year in June, down from 4.1% in May.
- Core PCE inflation rose 0.1% month-over-month in June, below expectations.
- Bitcoin price rallied to trade above $65,000.
- The odds of a Federal Reserve rate hike this year have slightly decreased.
- The Fed's target inflation rate remains 2%.
The U.S. Personal Consumption Expenditures (PCE) price index, a key inflation gauge for the Federal Reserve, showed a cooling trend in June. The PCE rose 3.7% year-over-year, down from 4.1% in May and meeting expectations. Month-over-month, the index saw a slight decrease of -0.1%. Core PCE inflation, which excludes volatile food and energy prices, also slowed to 3.3% year-over-year and increased by 0.1% month-over-month, below forecasts. Despite the slowdown, inflation remains above the Fed's 2% target, prompting the central bank to maintain its current interest rate policy for the fifth consecutive meeting, though three officials dissented in favor of a hike. The softer inflation data has led to a slight decrease in the perceived likelihood of a Fed rate hike this year, with market participants now pricing in a higher probability that rates will remain unchanged at the September FOMC meeting. In response to the inflation news, Bitcoin experienced a rebound, trading above the $65,000 mark.