U.S. CPI Rises More Than Expected in August, Fed Rate Cut Still Likely

The long-awaited U.S Consumer Price Index (CPI) for August 2025 is finally out. The inflation data came hotter-than-expected, putting the Federal Reserve in a tough spot regarding interest fed rate cuts.

Investors eagerly awaited the release of August CPI data. They hoped it would show how inflation trends might influence Bitcoin and other crypto prices.

Details of the U.S CPI August Report & Odds of Rate Cuts

Essentially, the U.S. CPI data provides details on inflation trends. Hence, it influences monetary policy decisions by the Federal Reserve.

Data provided by Wu Blockchain revealed that the Core CPI. This excludes volatile food and energy prices, which increased 0.3% over the previous month. This figure, however, aligns with the 0.3% expected by economists and the 0.3% increase witnessed in July.

Likewise, the CPI increased by 3.1%, Year-over-Year (YoY). This aligns with expectations and is unchanged from the July figures.

Also, Headline CPI, which includes food and energy, surged 2.9%, matching expectations. However, it came higher than the 2.7% seen in July.

This marks the largest annual increase in seven months. The 2.9% increase in headline CPI indicates stronger inflationary pressure. This may result in consumers reducing their spending.

Despite this situation, the current reading is not alarming. The data came in line with expectations. Core CPI stayed steady, signaling inflation is under control. However, the data is not expected to stop the future rate cuts.

Fed Signals Fed Rate Cuts Amid Labor Market Concerns

The Federal Reserve seeks to keep the annual inflation rate at 2%. Typically, an increase above this target reduces expectations for interest fed rate cuts. It also strengthens the dollar and pushes crypto prices down.

However, the Federal Reserve will likely prioritize the weakening labor market over the modest inflation uptick. Hence, the market expects rate cuts at the next FOMC meeting.

Lower interest rates can stimulate job growth and economic activity. Besides, Federal Reserve Chairman Jerome Powell hinted earlier that quantitative easing could happen this September.

Federal Reserve Governor Chris Waller reiterated that rate cuts should begin at the FOMC meeting. According to the Governor, the Fed does not need to follow a fixed sequence and can adjust based on economic conditions.

Current Situation in the Bitcoin Market

In response to the August CPI data, the Bitcoin price quickly exceeded $115,000. BTC has surged 0.96% to $115,120 over the past 24 hours. The 24-hour trading volume also increased by 4.7% to $54.4 billion, signaling renewed investor interest.

Per technical analysis, Bitcoin is currently trending above the Bull Market Support Band, a key indicator for tracking long-term price movements. Historically, this support band has acted as a strong base for the BTC price during bull markets.

In previous cycles, Bitcoin usually experienced price breakouts each time the price touched the support band. Therefore, analysts hope a break above the $115,000 resistance zone could trigger a price rally.

Surging inflows into the spot exchange-traded funds (ETFs) have also contributed to BTC momentum. According to Farside Investors data, the spot BTC ETFs have recorded yet another day of inflows on September 12.

The net inflows reached $552.7 million today, with BlackRock’s IBIT taking the lead. This is the fourth consecutive day of inflows, implying increased confidence in BTC by institutional investors.

Meanwhile, BTC is not the coin showing optimistic sentiments. Top altcoins, including Ethereum (ETH), XRP, and Solana (SOL), have registered daily gains of 2.3%, 0.8%, and 5.9%, respectively.