Cryptocurrency prices traded sideways on Wednesday after a widely watched inflation gauge showed inflation grew hotter in the U.S. last month.
The Consumer Price Index (CPI) rose 3.7% in the 12 months through August, the Bureau of Labor Statistics (BLS) said on Wednesday, coming in slightly above economists’ expectations of 3.6%.
The index rose 0.6% in August on a month-to-month basis after a 0.2% bump in both July and June. The relatively larger increase was attributed to rising gasoline prices, the BLS said, which accounted for over half of the index’s increase.
traded hands at around $26,100 after the report’s release, which was flat over the past day, according to CoinGecko. had fallen 0.5% during the same period to around $1,600, while altcoins like and saw slight losses too.
Wednesday’s report will be one of several factors, such as the strength of the U.S. labor market and recent Personal Consumption Index (PCI) figures, weighed by the Federal Reserve ahead of its next interest rate announcement on September 20.
The Fed has stiffened its monetary stance in response to inflation that reached 9.1% last June—it was the biggest yearly increase since 1981. Higher interest rates cool the economy by making it more expensive for businesses and consumers to borrow.
Aside from dampening economic growth, higher interest rates have weighed on cryptocurrencies and other so-called risk assets like stocks, as assets like U.S. Treasuries become relatively more attractive to investors.
Even though inflation has fallen considerably from its sweltering clip last June, its pace remains above the Fed’s target of 2% annually.
The U.S. central bank ratcheted its benchmark interest rate to between 5.25% and 5.5% in July, a 22-year high that followed a skip in June. When the Fed elected to not raise interest rates in June, it was the first time the Fed had flinched in 18 months.
Traders penciled in a 91% chance on Wednesday that the Fed would keep rates steady after its meeting later this month, with a 5% chance of a cut in January of next year, according to the CME Group’s FedWatch Tool.
Cryptocurrency prices dipped in August after minutes from the Fed’s latest meeting on interest rates were released. Hawkish undertones gave traders pause alongside an affirmation that the Fed “remains highly attentive to inflation risks.”