U.S. CPI Rises More Than Expected in August, but Bitcoin holds steady as Fed Rate Cut Still Likely

Bitcoin maintained its recent positive performance to remain above $114,000. This was after the US Bureau of Labour Statistics (BLS) released consumer prices data. The data released on Thursday shows that the consumer price index (CPI) increased by 2.9% annually.

This is the highest jump since January, even as core CPI remained stable at a 3.10% increase. Core CPI excludes food and energy costs and was expected to increase by that percentage earlier.

The overall increase in inflation metrics, particularly the 0.4% rise in CPI, confirms that inflation remains a sticky problem for U.S. residents. Other economic metrics are also showing alarming signs.

It comes on the back of another revision to the jobs data by the BLS a few days ago. The department reduced the number of jobs added in the one year ending in March 2025 by 911,000. This marked the biggest annual revision to U.S. jobs data. It showed that the labor market has struggled for much longer.

Despite concerns about economic developments, the crypto market held steady. Market expectations still indicated that the Federal Reserve would cut interest rates as planned.

According to data from CoinMarketCap, Bitcoin saw a slight increase in value over the last 24 hours. Ethereum and Solana also followed. Some altcoins, such as Cardano (ADA) and Hyperliquid (HYPE), saw slight declines. However, the general performance remained positive.

This means the crypto market maintains the positive momentum built on the rate cut expectations. Investors are already positioning for the next Fed meeting, with Binance seeing its highest net stablecoin inflow this year with over $6.25 billion on September 8.

Polymarket Puts Chances of a 25% Rate Cut for September at 85%

Meanwhile, the confidence about the upcoming rate cut remains the fuel behind market performance. The Federal Reserve’s Federal Open Market Committee (FOMC) is scheduled to meet on September 17, and most market observers believe it will cut rates by at least 25 basis points (bps).

If this happens, it would mark the first rate cut since December 2024, bringing the rate to the 4.25% – 4.50% range. Sticky inflation data, such as the most recent CPI, has been part of why the Fed has declined to cut rates for months.

However, pressure from President Donald Trump, who has been calling for rate cuts for months, coupled with a weak job market and concerns of recession, has strengthened the case for the Fed to become dovish.

Blockchain-based prediction app Polymarket now puts the odds of the Fed cutting rates in September at around 97.5%. The prediction market on the issue currently has around $102.2 million, making it one of the most popular on the network.

Although almost everyone expects a cut, an overwhelming majority of 85% expect a 25bps cut by September 17, while just 12.6% believe the Fed could cut rates by 50bps or more.

Conclusion

The sentiment on Polymarket also aligns with data from FedWatch, where the probability of a 25bps now stands at 88.8%. In comparison, optimism of a bigger cut has dropped significantly to 11.2%.