Bitcoin's price rose following data released Wednesday showing that inflation increased slower than expected. The personal consumption expenditures price index, which serves as the Federal Reserve's main inflation gauge, increased in August by 3.4% on headline and 3% for core, both coming in below estimates.
Following the data release, bitcoin's price jumped as high as $85,518 during Wednesday morning trading in New York, and recently stood at $84,246.
The inflation figures indicate that the Federal Reserve is less likely to hike interest rates in October. Persistent high inflation has previously led the U.S. central bank to adopt a more hawkish approach to monetary policy, which included an interest rate hike in September following comments from Fed Chair Kevin Warsh that the bank still had work to do to combat inflation.
Despite earlier policy moves, bitcoin experienced a strong run in the weeks following the September rate increase, surging as high as $87,158 earlier in the month. Analysts noted that investors appeared to look past the policy shift because they did not expect the Fed to implement successive rate hikes.
Bitcoin has also rallied since the U.S. Treasury announced plans to more than double the size of its government debt repurchases. Historically, bitcoin has performed well in low interest rate environments alongside other risk-on assets.
Meanwhile, U.S. President Donald Trump has repeatedly pressured the Federal Reserve to lower interest rates, having previously criticized former Fed Chair Jerome Powell over monetary policy decisions.
