The US Federal Reserve’s (Fed) preferred inflation measure PCE will be higher in February, but in line with market expectations, according to the latest PCE report from the US Bureau of Economic Analysis. Now we officially have rising inflation for CPI, PPI and PCE. Meanwhile, the price of Bitcoin (BTC) remains under pressure ahead of Fed Chairman Jerome Powell’s speech later today.

US PCE inflation slows to 0.3% month-on-month in February, after rising 0.4% in January. Also, the monthly core PCE index, excluding food and energy, came in at 0.3%, a slowdown from a 0.5% increase the previous month.

On the other hand, the annual PCE rate rises 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, expected inflation to ease in the coming months. However, JPMorgan Chase CEO Jamie Dimon said the Fed should wait longer before cutting rates, most likely after June.

Amid Wall Street estimates largely in line with market consensus, Fed Chairman Jerome Powell expects three rate cuts in 2024. CME FedWatch shows a 61% chance of Fed rate cuts in June, with May off the table. Moreover, there is a 49% chance of a further rate cut of 25 basis points in September.

The US dollar rate (DXY) rose above 104.50 on Friday, having risen steadily since the beginning of the month. Additionally, yields on US 10-year Treasury bonds (US10Y) fell slightly to trade around 4.20% after the PCE inflation report provided investors with some relief on inflationary pressures, reinforcing bets that the Fed will soon begin lowering interest rates. Bitcoin’s price typically moves in the opposite direction of the US dollar and US Treasury bond yields.


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