The U.S. Bureau of Labor Statistics reported that the core Consumer Price Index (CPI) rose 2.6% year-over-year in June, slightly below the anticipated 2.7% and down from 2.8% in May. The softer-than-expected inflation reading gives the Federal Reserve greater flexibility to adjust monetary policy, reigniting hopes for a rate cut later this year.
Inflation Easing Strengthens Rate-Cut Bets
Core CPI excludes volatile food and energy prices, offering a clearer picture of underlying inflation trends. Compared with the consensus estimate of 2.7%, the actual figure suggests that price pressures are gradually abating. While overall inflation remains above the Fed’s 2% target, the downward trend is enough for policymakers to keep their options open. Analysts now see the probability of a September rate cut rising from 65% to over 80% if subsequent data continue to weaken.
Following the release, U.S. Treasury yields edged lower, the dollar index slipped, while equity futures and cryptocurrency markets rallied. Bitcoin climbed about 1.2% within 15 minutes, retesting the $60,000 level, and Ethereum also saw gains.
Risk Assets Catch a Tailwind
Historically, falling inflation expectations combined with easier monetary policy tend to support high-beta assets. Bitcoin and other digital assets have shown increased correlation with traditional risk assets recently, especially when interest rate expectations turn dovish. With Kevin Warsh reportedly set to be sworn in as Fed Chair (as indicated in related news from May 2026), markets anticipate the new leadership may continue a gradual dovish stance, further supporting liquidity for crypto markets.
However, some analysts caution that core services inflation remains sticky. Investors should watch upcoming PCE data and Fed speakers’ comments. Crypto traders are advised to manage volatility risk and maintain proper position sizing.