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US inflation data for July showed the headline PCE price index climbing 0.2% month-over-month, above the 0.1% increase economists had expected and reversing a 0.1% decline in the prior month. On an annual basis, headline PCE held steady at 3.7%, slightly exceeding the 3.6% forecast. Core PCE, which strips out volatile food and energy prices, rose 3.3% year-over-year, matching both the consensus estimate and the previous reading. As the Federal Reserve's preferred inflation gauge, the hotter-than-expected monthly print could make an earlier start to rate cuts less likely. Markets have been anticipating potential policy easing later this year, but persistent price pressures may keep the Fed cautious. For risk assets such as cryptocurrencies, a less dovish outlook typically reduces the prospect of cheaper liquidity, which can weigh on risk appetite and amplify intraday volatility as traders recalibrate their positions.
