Aligned with most expectations, the US Consumer Price Index showed a 2.5% year-over-year increase in August, which is 0.4% lower than the number for July.

According to experts, this almost settles the debate on whether the Federal Reserve will cut the base interest rates by 25 basis points or 50.

The CPI increase of 2.5% for August showcases a moderate decline in the metric for the past year. In fact, the YoY climb for August 2023 was at 3.7%. The 2024 high came in March at 3.5%.

The Core CPI, which excludes more volatile sectors like food and energy, increased by 3.2% for August 2024, which is the same as the numbers for July.

This CPI report had a particular meaning for investors as its the last before the September 18-19 FOMC meeting. Recall that Fed Chair Jerome Powell said in late August that the time has come for the central bank to start lowering the interest rates.

Most experts now believe that the promising numbers for the inflation rates mean that the Fed will introduce a 25 basis point cut next week.

Should that be the case, the development could already be priced in, especially for riskier assets like bitcoin.

The primary cryptocurrencys price was relatively stable before the CPI numbers came out. After the announcement, it went down to $56,200 (on Bitstamp) before it shot up by about a grand.

However, given previous examples of substantial price movements, todays $1,000 fall and rise seem rather insignificant.

Bitcoin/Price/Chart 11.09.2024. Source: TradingView