Inflation Takes a Pill, $BTC Takes a Pillow 😴

The U.S. Personal Consumption Expenditures (PCE) price index rose 3.7% year-over-year in June, cooling from 4.1% in May and matching economist expectations, according to the Bureau of Economic Analysis. The headline gauge fell 0.1% month-over-month, also in line with forecasts. Core PCE, which excludes volatile food and energy components, came in at 3.3% year-over-year and edged up 0.1% month-over-month, undershooting the 0.2% monthly consensus.

The June print marks a step down from May's levels, though inflation remains well above the Federal Reserve's 2% target. The Federal Open Market Committee (FOMC) held the federal funds rate steady at its most recent meeting, the fifth consecutive pause, with three Fed officials dissenting in favor of a rate hike, according to the source reporting. The slowdown was attributed in part to the pause in a U.S.–Iran conflict that has since resumed.

Bitcoin ($BTC) rebounded on the data, reclaiming the $65,000 level after the release. The price move came as traders weighed the implications of a softer inflation print against a still-hawkish dissent within the Fed, though the article does not characterize the market reaction beyond the reported price action.

Core PCE's 0.1% monthly print was the notable undershoot relative to the 0.2% consensus, while the headline 3.7% annual rate aligned with expectations and marked the lowest year-over-year reading since March 2023 per the BEA series referenced. The 0.1% monthly decline in the headline index was driven by falling goods prices, partially offset by services inflation, consistent with BEA's published components for the month.

The Fed has now kept its policy rate unchanged across five consecutive FOMC meetings, even as officials remain split on the path forward, with three members voting for a hike at the latest gathering per the published dissent. Inflation continues to run above the 2% target, and the resumed U.S.–Iran conflict has reintroduced an energy-price variable that fed into the prior month's moderation.