US CPI and PPI inflation data land next week, and the crypto market is watching for hints on the Federal Reserve's next move. CPI is expected to rise to 3.7% year-over-year in September. Markets still expect the Fed to hold rates at its October meeting.
The crypto market heads into a week with two inflation reports due. The US CPI and PPI releases are scheduled for next week, and they may shape expectations for the Fed's next step.
However, the market expects the Fed to keep interest rates unchanged at its October meeting. The latest FOMC minutes nonetheless showed officials might consider another rate hike this year, which has fueled discussion among market participants.
CPI forecast points to hotter inflation
The CPI report is due on Wednesday, October 14. Forecasts call for 0.6% on a monthly basis for September, against 0.4% in the prior month.
On a year-over-year basis, inflation is expected at 3.7%, up from 3.4% in the prior month's reading.
Core CPI, which excludes food and energy prices, is expected at 0.2% monthly and 2.5% year-over-year. The August readings were 0.3% and 2.4%, respectively.
The PPI follows on Thursday, October 15, with a forecast of 0.6% month-over-month versus 0.4% in August.
Hot readings could open the door to another hike
If the readings come in hotter than expected, it could dampen market sentiment. A hotter print would also give the Fed more room to consider another rate hike by the end of 2026.
In the last FOMC minutes, Fed officials signaled they might raise rates by another 25 bps by year-end, which has weighed on sentiment. The crypto market often faces higher volatility when policy rates are higher.
For October, however, the CME FedWatch Tool puts the odds of a hike at only 17.7%. The data might still trigger volatile trading in digital assets and broader financial markets.
Source: CoinGape
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