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US inflation is slowing down with a small rise of 2.4% in September, leading to potential further interest rate cuts. This could be good news for Bitcoin and other cryptocurrencies as lower rates usually has a positive impact on them, reducing borrowing costs and promoting investment in riskier assets. However, current down trends in Bitcoin price and mixed economic data such as decreasing unemployment rates yet increasing jobless claims leave the Federal Open Market Committee with a lot to consider for the economy’s future. Overall, there is an 89% chance that interest rates will be lowered at the next meeting in November.

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Despite a small uptick in September, US inflation seems to be cooling down. This suggests more cuts to interest rates may be on the way, and that’s good news for Bitcoin and other cryptocurrencies.

On October 10, the US Bureau of Labor Statistics shared that the Consumer Price Index (CPI) went up at a 2.4% rate annually in September. That’s the smallest increase since February 2021.

This figure is just marginally over the anticipated 2.3% for September, but it follows a downward trend. It’s lower than the increase of 2.5% we had in August 2021. Just two years back, our inflation rate was at a staggering 8.2%. The highest it got was 9.1% in June 2022.

Digital assets company 21Shares suggests that despite prices continuing to climb, recent data showing a drop in unemployment from 4.2% to 4.1% hints at an 80% chance of a 0.25% rate cut in the next month.

According to Leena ElDeeb, a research analyst at 21Shares, Bitcoin and other cryptocurrencies are sensitive to inflation metrics. Their worth is often influenced by the feds’ monetary policy decisions. A drop in rates usually leads to a favorable impact on Bitcoin by reducing borrow costs and thus, we might see market recovery after the recent turbulence due to geopolitical tensions.

Typically, lower borrowing costs encourage more investment in riskier assets, like cryptocurrencies and stocks. However, the latest inflation report hasn’t improved trader sentiment.

The Bitcoin price is currently continuing its downward trend, dropping 1.6% and trading at $60,604.

The Federal Open Market Committee (FOMC) now has to take a close look at this mixed bag of data to figure out the future of the US economy. On the one hand, the US gross domestic product increased by a steady 3% annual rate from April to June. On the other hand, weekly jobless claims hit a high unseen in 14 months on October 5, with 258,000 applications nationwide.

Markets are placing their bets on the Fed, with an 89% chance they’ll lower rates by 0.25% at the next policy meeting from November 6-7, according to data from CME Group’s FedWatch tool.

Source: Cointelegraph