Good news for those keeping an eye on interest rates: U.S. inflation, by the Federal Reserve’s preferred measure, crept up just a little in July. This gentle rise could give the Fed reason to cut rates soon, maybe even in September. Investors have been hoping for this, as lower rates often make riskier assets more appealing.
The Personal Consumption Expenditures, or PCE, Index rose 0.2% in July compared to the month before. This is exactly what analysts expected. The U.S. Bureau of Economic Analysis (BEA) shared these figures today. If you take out food and energy, which can swing wildly, the core PCE still grew 0.3% month-over-month. Looking back a full year, overall PCE climbed 2.6% from July 2025, while core PCE saw a 2.9% increase.
The PCE index tracks how prices change for goods and services American households buy. It’s a key number the central bank watches when deciding on money policy. This moderate jump in July suggests inflation is largely under control. However, the Fed is still keeping a close eye on prices for basic services and wage trends.
Crypto Markets Felt Uneasy
Before these inflation numbers came out, financial markets were a bit nervous. Cryptocurrencies showed noticeable swings. Bitcoin, the world’s largest digital coin, dipped below $110,000 overnight in Eastern Time. It managed a small rebound by Friday morning. Right now, Bitcoin is trading around $110,500. That’s down 2.5% in the last 24 hours. It’s also 10.8% below its mid-August peak of $124,000, according to CoinGecko data.
Analysts from Bitunix, in comments shared with CoinDesk, noted that this PCE report will guide the Fed’s future decisions on easing monetary policy. They said it matters more than the September rate decision itself. If the data meets or falls below expectations, market confidence might hold steady. But a significantly higher reading could make the Fed take a “wait and see” approach. Investors should watch basic services, wage trends, Treasury bond yields, and the DXY index. These are key factors that influence how much risk people are willing to take.
CoinDesk’s newsletter also pointed out that softer inflation could especially help Ethereum’s recent upward trend. Big institutional investors are showing renewed interest. Ethereum exchange-traded funds (ETFs) have seen record inflows. More than a billion dollars poured in this week, according to SoSoValue. That’s almost double what Bitcoin ETFs attracted. Ether, the cryptocurrency of the Ethereum network, is trading a little above $4,400 as of this writing. It’s down 4.2% for the day and 11% below its recently hit record high of $4,950.
Since the PCE data matched what experts expected, it makes it more likely the Fed will continue its plan of slowly easing monetary policy. This could involve interest rate cuts in September. Investors widely anticipate this, as it can boost interest in riskier assets. This potentially pumps more money into the markets.
The report also showed personal income rose by 0.4% and personal consumer spending went up by 0.5%. This was mainly because people earned more, especially in service jobs. The personal savings rate stood at 4.4% in July. The BEA will release the next PCE data, including August’s estimates, on September 26.