Crypto Market Trading in Red Post U.S Core PCE Increasing to 4.7%
- Market participants had expected a figure closer to 4.9%.
- The Federal Reserve’s favored inflation measure showed a negative reading on Friday.
The Personal Consumption Expenditures (PCE) Price Index, which measures inflation in the United States, rose to 5.4% year over year in January from 5.3% in December. This follows the news that was just issued by the U.S. Bureau of Economic Analysis. Market participants had expected a figure closer to 4.9%, therefore the actual result exceeded their expectations.
The Federal Reserve’s favored inflation measure showed a negative reading on Friday, adding to the growing body of data that suggests interest rates may need to be hiked in the near future to bring prices back under control.
The preferred measure of inflation, the annual Core PCE Price Index, rose to 4.7% from 4.6% in the same period, above experts’ projections of 4.3%. Inflation as measured by both the PCE price index and the more narrowly defined core PCE index rose by 0.6% month over month.
Market Turns Red
As a result, the Fed’s preferred measure of inflation (the core rate of personal consumption expenditures) increased for the first time in four months, to 4.7%. This is still much beyond the Fed’s 2% target, though. The results bolster fears that the Federal Reserve may have to keep interest rates high for a longer length of time to stop the flow of increasing prices. Yet there has been a major sell-off in the cryptocurrency sector. The leading digital currency by market capitalization, Bitcoin (BTC), is now trading at $23,111. The price of Bitcoin has dropped by 3.21% in the last 24 hours. The price of Ethereum (ETH), the second most valuable cryptocurrency behind Bitcoin, also dropped 2.75$ and is now trading at $1,594 as of this writing.
