US PCE inflation reached 3.7% year-over-year in July 2026, slightly above the consensus estimate of 3.6%, while US GDP for the second quarter was confirmed at 1.5% annualized, a sharp slowdown compared to 2.1% in the first quarter. These contrasting economic figures, released on August 26 by the Bureau of Economic Analysis, point to a nascent stagflation scenario that puts the Federal Reserve in a dilemma: cutting rates to support growth risks fueling inflation already well above the 2% target. According to the CME Group’s FedWatch tool, markets are pricing in a 60% probability of rates staying in the 3.5% to 3.75% range, and a 40% chance of a hike toward 3.75% to 4%. Bitcoin was trading around $78,000 to $78,500 in the hour following these releases, with the broader crypto market slightly down, despite net inflows of $2.57 billion into US spot Bitcoin ETFs over the past seven days.
Source: Read the original article
