Bitcoin News Today: U.S. Inflation Eases to 2.7% YOY Spurring Fed Rate Cut Speculation

Markets have responded positively to the latest U.S. inflation data, which showed a year-over-year rise of 2.7% in July—marginally below the 2.8% forecast—sparking renewed optimism about a potential Federal Reserve rate cut [1]. The data, which includes a 0.2% increase in the housing index and a 1.1% drop in energy prices, has tempered inflationary pressures, offering investors a temporary reprieve [2]. The softer reading has invigorated equity markets, with the S&P 500 rising on the news as the likelihood of Fed easing grows [2].

The Federal Reserve's internal discussions also appear to be shifting in favor of rate cuts. Two Fed officials have explicitly endorsed the idea, while a potential appointee under President Trump is expected to support a reduction. This, along with cooling labor market signals, strengthens the case for a September policy easing [3]. A Fed spokesperson noted that “significant cooling signals in the labor sector and relatively stable inflation support expectations for a potential rate cut,” indicating the central bank’s growing openness to easing [3].

Investor enthusiasm is also evident in the crypto market, where Bitcoin and Ethereum have seen renewed buying interest. Bitcoin rebounded to $119,000, and Ethereum surged, reflecting a broader shift in risk appetite [3]. The cryptocurrency market, now valued at $4.1 trillion, continues to attract institutional demand and spot ETF inflows, with Ethereum outperforming Bitcoin by rising over 29% year-to-date [10].

However, the inflation report also contains mixed signals. While headline inflation is easing, core inflation—excluding volatile food and energy—is expected to remain elevated at 3.0% year-over-year, according to market expectations [5]. This suggests that underlying price pressures, though not immediate, still pose a challenge for policymakers.

Global markets have also been influenced by U.S.-China trade developments. A recent executive order extending the tariff truce with China to November has temporarily eased concerns over supply chain disruptions and inflationary shocks [6]. Nonetheless, uncertainty remains, as future trade actions could quickly reverse this sentiment.

The cautious optimism is also reflected in traditional financial markets. Wall Street indices have pulled back slightly after hitting recent highs, with the S&P 500, Nasdaq, and Dow Jones each declining by 0.3% to 0.5% [8]. Treasury markets have remained rangebound, as investors wait for further clarity before positioning for Fed policy changes [9].

As the market anticipates the Fed’s next move, the coming weeks will be crucial in determining whether the current optimism leads to a broader rally or fades under renewed uncertainties. The Fed's data-dependent approach means that a stronger-than-expected CPI in August could delay rate cuts, while a continued decline in inflationary pressures could accelerate the easing timeline [12].

Source:

[1] https://www.bloomberg.com/news/articles/2025-08-11/stock-market-today-dow-s-p-live-updates

[2] https://www.proactiveinvestors.com/companies/news/1076544/s-p-500-climbs-after-soft-inflation-data-increases-bets-of-fed-easing-1076544.html

[3] https://coinmarketcap.com/community/articles/689b467fe5de8d42b785edc7/

[5] https://www.reuters.com/business/wall-st-futures-steady-investors-brace-crucial-inflation-data-2025-08-12/

[6] https://anndy.com/op-ed/why-tonights-inflation-report-could-shake-global-markets-to-their-core/

[8] https://finance.yahoo.com/news/live/stock-market-today-dow-sp-500-nasdaq-slump-with-key-inflation-report-on-deck-200041060.html

[9] https://www.interactivebrokers.com/campus/traders-insight/ibkr-economic-landscape/markets-gain-cautiously-as-investors-await-huge-cpi/

[10] https://e27.co/why-tonights-inflation-report-could-shake-global-markets-to-their-core-20250812/