September’s inflation data, which had been delayed by the government shutdown, is expected to be high at 3.1% but it is unlikely to stop momentum for Fed rate cuts.
Crypto market observers have locked their gaze on the delayed US inflation report for September, which is expected to be published on Friday and exceed 3% for the first time in 2025, which could have a knock-on effect on crypto markets.
The US Bureau of Labor Statistics is scheduled to publish the consumer price index (CPI) for September on Friday. It has been delayed due to the ongoing government shutdown, which is now in its 24th day.
Economists forecast that September inflation rose 0.4% monthly and 3.1% annually, so it would be the first time headline CPI would exceed 3% this year, according to Trading Economics.
CPI print could impact crypto
The CPI report will be the first major data release since the US government shutdown at the beginning of this month.
Investor Ted Pillows said that if CPI comes in at 3.1% or more, the rate cut odds could go down, but if it comes in at 3% or lower, “it’ll be good for the markets.”
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Analyst ‘Ash Crypto’ concurred, stating that higher than 3.1% will be bearish for markets “because it’ll mark the highest CPI print since June 2024.”
Around 3.1% will be in line with expectations, but below 3.1% is the “perfect scenario for risk-on assets.”
“Rate cuts will happen, and also the MoM increase in CPI will be just 0.1% or 1.2% annualized. This will also boost chances of more rate cuts and will cause liquidity to flow into risk-on assets.”
“We realize that the Fed has said that their focus is now on the employment picture, but whether tomorrow’s CPI data is a lot different than expectations or not could still have an impact on their thinking,” Matt Maley, chief market strategist at Miller Tabak, told Bloomberg.
“So, it will still have a big impact on the markets if it is indeed out of line with what the consensus is thinking,”
But hotter-than-expected inflation figures will not likely deter the Federal Reserve from cutting rates, according to Barron’s.
The central bank is more focused on the weakening labor market, and the probability of a rate cut next Wednesday is 98.3%, according to CME futures prediction markets.
However, the ongoing government shutdown could complicate the economic picture ahead of the Fed’s December meeting, when another rate cut is expected.
Markets march marginally higher
Crypto market capitalization has inched up 1.8% over the past 24 hours to reach $3.8 trillion.
Bitcoin (BTC) has led the move with a brief spike above $111,000 in late trading on Thursday before falling back to the $110,500 level at the time of writing.
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