The PCE inflation index referenced by the US Federal Reserve (Fed) was found to be still high for February despite being in line with market estimates, according to the latest PCE report by the US Bureau of Economic Analysis. Now, it can officially be said that CPI, PPI, and PCE inflation still remain high. Meanwhile, Bitcoin prices continue to be depressed ahead of Fed Chairman Jerome Powell's speech today.
PCE inflation in the US slowed to 0.3% in February, compared with a 0.4% increase in January. Also, the monthly core PCE index, which excludes food and energy, recorded a reading of 0.3%, slowing from a 0.5% increase in the previous month.
On the other hand, the annual PCE rate rose to 2.5% from 2.4%, which was the lowest since February 2021. Also, annual core PCE inflation came in line with estimates at 2.8%, lower than last month's 2.9%.
Wall Street giants including JPMorgan, Bank of America, UBS, Morgan Stanley, Citigroup, Deutsche Bank, Nomura, RBC, Barclays, Goldman Sachs, TD Securities, and Wells Fargo predict inflation will ease in the coming months. However, JPMorgan Chase CEO Jamie Dimon said the Fed should wait longer before cutting interest rates, possibly after June.
Amid Wall Street estimates mostly in line with market consensus, Fed Chairman Jerome Powell expects three rate cuts in 2024. CME FedWatch shows a 61% probability of a Fed rate cut in June, with May excluded. Additionally, there is a 49% probability of a rate cut of 25 basis points in September.
The US dollar index traded above 104.27 on Friday, rising steadily since the start of the month. Additionally, US 10-Year bond yields pared some gains to trade around 4.20% after the PCE inflation report offered relief to investors on inflationary pressures, and reinforced expectations that the Fed will start cutting interest rates soon. Bitcoin prices usually move inversely relative to the US dollar and US bond yields.
The crypto market saw the largest Bitcoin and Ethereum option maturities, with leading crypto derivatives exchange Deribit settling more than $15 billion in BTC and ETH options.
BlackRock encourages investors to 'primarily' focus on Bitcoin over other cryptocurrencies. Bitcoin ETFs continue to see large daily inflows, with a net inflow of 182.8 million on Thursday. GBTC outflows are also decreasing as FTX and Genesis sell their holdings.
Analyst Markus Thielen is bullish on the Bitcoin price which could rise above $100,000 and reach $140,000 after the Bitcoin halving.
BTC price shows volatility, with the price currently trading at $70,479.
