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Fed’s Favorite Inflation Gauge Just Hit Its Highest Level Since 2023: What It Means for <a href="https://tech-oracle.com/btc-usd/">Bitcoin</a>

Inflation, as measured by the Personal Consumption Expenditures (PCE) price index, rose to 3.8% in April, matching expectations and reaching its highest level since May 2023. This increase, which is the rate the Federal Reserve prefers to monitor, moved inflation further away from the Fed’s 2% goal, causing Bitcoin’s price to fall towards $73,300.

The core Personal Consumption Expenditures (PCE) price index increased 3.3% over the past year, matching expectations. However, the monthly increase was lower than anticipated, at 0.2% compared to an expected 0.3%. This suggests interest rates may remain high for an extended period.

PCE Print Confirms Sticky Inflation

On Thursday, the Bureau of Economic Analysis published its report on personal income and spending for April. The main inflation measure, the Personal Consumption Expenditures (PCE) price index, rose 3.8% from a year ago – reaching its highest point since May 2023, as economists had predicted.

The core Personal Consumption Expenditures (PCE) price index, which doesn’t include the often-volatile costs of food and energy, rose to 3.3% compared to a year ago. This is the highest rate since October 2023 and is almost double the Federal Reserve’s goal of 2%.

Recent monthly data offered a bit of good news for those hoping inflation is cooling. The core Personal Consumption Expenditures (PCE) price index – a key measure of inflation – increased by just 0.2% in April. This was lower than expected, as economists had predicted a 0.3% rise, and also slower than the increase seen in the previous month.

People’s incomes didn’t change this month, falling short of expectations of a 0.4% increase. However, consumer spending did increase by 0.5%. New applications for unemployment benefits totaled 215,000, a bit higher than the anticipated 211,000. First-quarter economic growth was also adjusted downward to 1.6%.

Here’s a quick update on recent US economic data: Initial jobless claims for the week of May 23rd came in at 215,000, slightly above the expected 211,000. Preliminary first-quarter GDP growth was 1.6%, a bit lower than the anticipated 2.0%. The Price Index for Personal Consumption Expenditures (PCE) increased by 0.4% in April, month-over-month, which was less than the expected 0.5%. Year-over-year, the PCE price index rose 3.8%, matching expectations.

— Solid Intel 📡 (@solidintel_x) May 28, 2026

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Crypto Pulls Back as Higher-for-Longer Stance Holds

Bitcoin’s price fell to around $73,404, a decrease of 2.89% in the last day. Its total market value is approximately $1.47 trillion. This drop is similar to a previous decline that happened after a Federal Reserve official, Christopher Waller, signaled a potentially stricter monetary policy.

Looking at the CME FedWatch data, I’m seeing an extremely high probability – 98.9% – that the Federal Reserve will hold interest rates steady between 3.50% and 3.75% at their June 17 meeting. The market isn’t expecting a rate cut at all, with only a 1.1% chance of a quarter-point reduction being priced in.

The data extends a higher-for-longer Fed stance that markets have been pricing for weeks.

Persistent high inflation in the US has boosted the dollar’s value and created challenges for investments that don’t offer a return, like some bonds. The Kobeissi Letter believes this recent economic data is a negative sign for those hoping the Federal Reserve will soon lower interest rates.

Inflation, as measured by the Personal Consumption Expenditures (PCE) price index – the Federal Reserve’s preferred gauge – increased to 3.8% in April, the highest level since May 2023. Excluding food and energy, so-called ‘core’ PCE inflation rose to 3.3%, a peak not seen since October 2023. According to analysts at the Kobeissi Letter, this means the Fed’s primary inflation indicator is almost twice its target, which is a negative sign for those hoping the Fed will soon lower interest rates.

Mohamed El-Erian, Allianz’s chief economic advisor, provided a more balanced perspective on the recent economic data.

The latest economic data released this morning generally matches what experts predicted, and isn’t expected to cause any major shifts in how economists view the economy or impact current market conditions.

What Comes Next

After the latest economic data release, forecasts suggest interest rate cuts are unlikely for the remainder of 2026. Increasing Treasury yields and a strengthening dollar have recently reduced interest in Bitcoin and gold.

Traders now watch upcoming nonfarm payrolls and the May CPI release for confirmation.

The next key Fed macro events will shape rate-cut odds heading into the second half of 2026.

April’s economic data could show that inflation is either starting to come down from its highest point, or continuing to stay stubbornly high. Upcoming reports on prices and employment will give us the answer.

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2026-05-28 16:52