U.S. PPI Cools To 2.6%, BTC Price Rises

TLDR

Table of Contents

U.S. PPI falls to 2.6% YoY, below the 3.3% forecast, signaling cooling inflation in August.
Core PPI drops to 2.8% YoY, missing the expected 3.5%, marking a slowdown in wholesale prices.
Bitcoin rises from $110,700 to over $113,000 after inflation data boosts hopes for Fed rate cuts.
Trump calls for a 100 BPS Fed rate cut as inflation data fuels rate cut expectations.

Bitcoin surged past the $113,000 mark after new inflation data showed that U.S. producer prices cooled more than analysts predicted. The sharp move comes as traders now anticipate deeper interest rate cuts from the Federal Reserve. Former President Donald Trump has also added pressure, calling for a 100 basis points rate cut to boost the economy further.

U.S. Producer Prices Ease More Than Forecast

The U.S. Bureau of Labor Statistics released new Producer Price Index (PPI) data showing that inflation at the wholesale level slowed more than expected in August. The year-over-year PPI came in at 2.6%, much lower than the 3.3% forecast and down from July’s reading of 3.3%.

The monthly PPI figure also surprised markets, showing a decline of 0.1%, against expectations of a 0.3% increase. This is the first monthly drop since early spring, signaling that cost pressures may be easing across the supply chain.

Core PPI, which excludes food and energy, also dropped to 2.8% year-over-year. This was below the projected 3.5% and last month’s figure of 3.7%. On a monthly basis, core PPI fell by 0.1%, also missing the 0.3% rise expected. Lower-than-expected core inflation strengthens the argument that overall pricing pressure in the U.S. economy is falling.

Bitcoin Jumps Above $113K as Traders Price in Larger Fed Cuts

Bitcoin reacted quickly to the lower inflation data, rising from an intraday low of $110,700 to over $113,000. According to TradingView data, the BTC/USD pair is now trading near $113,200 and showing signs of bullish momentum.

Market watchers link the jump in Bitcoin to expectations that the Federal Reserve could deliver a more aggressive rate cut. Traders are now pricing in the possibility of a 50 basis points cut, instead of the previously expected 25 basis points.

Former President Donald Trump added fuel to the discussion, calling on the Federal Reserve to cut interest rates by 100 basis points. “We need an aggressive cut to support American workers and the stock market,” he said during a campaign event earlier today.

With the Federal Reserve’s next policy meeting just a week away, the market is now closely watching for any forward guidance from central bank officials. The PPI data gives them more room to consider deeper cuts without risking inflationary pressure.

CPI Data Ahead as Fed Decision Nears

Attention now turns to the Consumer Price Index (CPI) data set to be released tomorrow. The CPI is the last major inflation report before the Fed meets next week to decide on its monetary policy.

Analysts say that if the CPI also comes in lower than expected, it could further justify a large rate cut by the Fed. Recent job market data has already shown signs of slowing, and lower inflation would support a more accommodative policy shift.

Federal Reserve Chair Jerome Powell has previously warned that the labor market is showing signs of weakness. He said in a recent speech, “We are watching employment trends closely, and we will adjust our stance if needed.” The PPI data may now shift the Fed’s focus more toward employment, especially if tomorrow’s CPI report confirms that inflation is continuing to ease.

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