Bitcoin Jumps to $85K as Core PCE Inflation Cools to 3%

Bitcoin moved higher on Wednesday after the Federal Reserve’s preferred inflation gauge showed price pressures easing more than economists had expected in August.

Bitcoin reacts to the data

The Commerce Department released its personal consumption expenditures (PCE) price index report on Wednesday morning.

Shortly after the numbers hit, the bitcoin price jumped from around $83,800 to $85,040.

Headline and core readings

The PCE price index rose a seasonally adjusted 0.3% for the month, putting the 12-month gain at 3.4%.

Economists surveyed by Dow Jones had been looking for increases of 0.3% and 3.7%, respectively.

Excluding food and energy, core PCE climbed 0.2% in August, bringing the annual core rate down to 3%.

Forecasts had called for a 0.3% monthly gain and a 3.3% annual rate, making the core reading notably lighter than anticipated.

Why the Fed watches core

Although the Fed officially follows the headline PCE number, officials generally consider the core figure a better gauge of longer-term inflation trends.

That makes the 3% core reading, which came in 0.3 percentage points below expectations, the more closely watched number in Wednesday’s release.

Changes to the methodology

The softer annual figures arrived as the Bureau of Economic Analysis adjusted the way it computes several components of the index.

It was not immediately clear what impact those revisions had on the final numbers, and the report was still developing at the time of publication.