U.S. inflation for August came in hotter than expected, though likely not enough to derail the Federal Reserve from cutting interest rates next week.
The Consumer Price Index (CPI) rose 0.4% last month versus expectations for 0.3% and 0.2% in July. On a year-over-year basis, CPI was higher by 2.9% versus a forecast 2.9% and 2.7% in July.
Core CPI, which excludes the volatile food and energy components, climbed 0.3% in August against forecasts for 0.3% and July’s 0.3%. Year-over-year core CPI rose 3.1% compared with the 3.1% forecast and July’s 3.1%.
Bitcoin slipped about 0.5% from $114,300 to $113,700 in the immediate aftermath of the data.
U.S. stock index futures gave up modest ground, now higher by just 0.1% across the board. The 10-year Treasury yield dipped about five basis points to 4.00% and the dollar strengthened a bit. Gold rose on the news, trimming an earlier loss of about 0.4% to 0.15% at $3,675 per ounce.
Prior to the CPI data, markets were pricing in a 92% chance of a 25 basis point cut at the upcoming Fed meeting and an 8% chance of a 50 basis point cut, according to CME FedWatch. The report likely puts to rest any idea of a 50 basis point move, which had gained steam following last Friday’s soft jobs report and Wednesday’s weak PPI numbers.
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