U.S. PPI Inflation Comes In Hot At 3.4% Ahead Fed Rate Decision

U.S. PPI inflation rose well above expectations in February, signaling renewed inflationary pressures in the U.S. economy. This inflation data comes just ahead of the Fed rate decision today, where the Fed is likely to hold rates steady over inflation concerns. Bitcoin and the broader crypto market extended their decline following this data release, with rate cuts this year now looking more unlikely.

U.S. PPI Inflation Rises To 3.4% In February

Bureau of Labor Statistics data shows that PPI rose to 3.4% year-over-year (YoY) last month, above estimates of 3.0%. Month-over-month (MoM), the Producer Price Index rose to 0.7%, above estimates of 0.3%.

The Core PPI inflation came in hotter, rising to 3.9% YoY, above estimates of 3.7% and to 0.5% MoM, above expectations of 0.3%. This latest inflation reading marks a massive upgrade from the January reading, when the PPI rose to 2.9% YoY.

This signals that inflation is on the rise and at risk of worsening amid the ongoing conflict between the U.S. and Iran, which is sending oil prices to new multi-year highs. The inflation data comes ahead of today’s FOMC meeting, where the Fed is likely to hold rates, with a 99% chance, according to CME FedWatch data.

The PPI inflation data is likely to further compel these Fed officials to hold rates steady, with officials like Fed Presidents Lorie Logan and Beth Hammack already raising concerns about rising inflation.

Crypto Traders Pare Rate Cut Bets After Inflation Data

Crypto traders pared their bets on the number of rate cuts this year following the data release. The odds of zero rate cuts this year have now jumped to 25%, according to Polymarket data. Meanwhile, crypto traders do not expect the Fed to lower rates until September at the earliest, with a 64% chance of a rate cut at the September FOMC meeting.

Bitcoin extended its decline following the release of this inflation data, dropping to the low $72,000 range. As CoinGape reported earlier, the crypto market fell sharply following an attack on Iran’s South Pars gas field. TradingView data shows that the crypto market is down over 2% today, led by Bitcoin, which is currently trading at around $72,400.