June Core PCE Rises to 2.8% Dampening Fed Rate Cut Hopes

The U.S. Personal Consumption Expenditures (PCE) inflation report for June 2025 revealed a persistent uptick in both headline and core metrics, raising questions about the Federal Reserve’s ability to cut interest rates in the near term [4]. The headline PCE inflation rose to 2.6% year-over-year, exceeding the 2.5% forecast, while the core PCE—excluding food and energy—hit 2.8%, in line with expectations but higher than the previous month [2]. The monthly increase in core PCE came in at 0.3%, matching estimates and underscoring continued inflationary pressures [4]. These figures have dampened market expectations for a rate cut in September, with the CME FedWatch tool showing only a 39% probability of a reduction [4].

The Fed’s decision to keep rates unchanged came amid growing concerns about inflation and broader market uncertainty. Some Wall Street analysts had anticipated a headline PCE reading of 2.5% and a core PCE of 2.8%, aligning with the final numbers, although the latter marked a marginal increase from the prior month [4]. With inflation persisting above the Fed’s 2% target, the central bank appears to be maintaining a cautious stance, balancing the need to curb price pressures against the risks of stifling economic growth [4]. Recent data also highlighted the role of U.S. tariffs in contributing to inflation, adding another layer of complexity to the Fed’s policy calculus [4].

The crypto market responded to the inflation report with heightened volatility. Bitcoin briefly held above $118,500 but showed signs of pullback, while Ethereum dipped to around $3,823, reflecting broader caution among traders [2]. Altcoins, including XRP, Solana, Dogecoin, BNB, and Cardano, fell between 1-2%, indicating a shift in risk appetite [2]. CoinGlass data revealed nearly $400 million in liquidations within 24 hours, with nearly 107,000 traders affected, including a single ETHUSDT order on Binance valued at $6.82 million [2]. The largest portion of liquidations were in long positions, totaling $280 million, and the market remains under pressure from uncertainty about further Fed moves.

The U.S. dollar index (DXY) hit 100 for the first time since May, while the 10-year Treasury yield climbed to around 4.36%, reflecting the market’s shifting expectations for monetary policy [2]. These developments add to the challenges facing the crypto market, which has historically been sensitive to macroeconomic signals. While some analysts remain bullish on the long-term potential of crypto assets, the short-term environment is characterized by increased volatility and risk aversion [4]. Lower interest rates could eventually make crypto more attractive, but with inflation still elevated and Fed policy signals unclear, the market remains in a state of flux [6].

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[2]title2.............................(https://cryptorank.io/news/feed/db68b-powell-june-pce-core-readings-beat)

[4]title4.............................(https://www.ainvest.com/news/fed-holds-rates-steady-pce-inflation-rises-2-8-dampening-cut-hopes-2508/)

[6]title6.............................(https://www.ainvest.com/news/trump-remarks-fuel-speculation-fed-rate-cut-crypto-market-anticipation-2507/)