BlockBeats news: On January 22, the U.S. Bureau of Economic Analysis (BEA) is about to release the latest Personal Consumption Expenditures (PCE) price index. The market generally expects that the momentum for a decline in core inflation remains insufficient. Consensus forecasts indicate that the year-over-year growth rate of core PCE will remain within the range of approximately 2.8% to 2.9%, while overall PCE is expected to rise by about 2.7% year-over-year. This shows that the inflation level is still significantly higher than the Federal Reserve's long-term target of 2%, and it exhibits a clear "high-level consolidation" pattern.
From a macro structural perspective, U.S. inflation is currently in a tug-of-war between bullish and bearish factors. On one hand, tariff-related costs and some commodity price increases provide a floor for inflation. On the other hand, slowing wage growth and a deceleration in rent increases are gradually suppressing service-sector inflation. This dynamic has kept inflation from worsening, but it is also making a rapid降温 (降温 here means "cooling down") unlikely, further narrowing the space for monetary policy. Combined with the data timeliness distortions caused by the previous government shutdown, this PCE report is more likely to be viewed as a "confirmation of the trend," rather than a key variable that would change the policy direction.
At the market level, a broad consensus has already formed: the Federal Reserve is likely to keep interest rates unchanged next week, with a probability of nearly 95%. In the short term, the high interest rate environment will continue to constrain the valuations of risky assets. In the medium term, if inflation remains persistently sticky while the economy does not show clear signs of recession, monetary policy will enter a longer period of observation.
Bitunix Analyst: In terms of the crypto market, the "prolonged high" in interest rates implies that liquidity is unlikely to improve significantly in the short term, and Bitcoin's correlation with risk assets will continue. However, if inflation cannot be effectively reduced in the long run and real interest rates gradually reach their peak, crypto assets will still have the potential to rekindle their narrative as a medium- to long-term hedge against monetary policy uncertainty. This PCE report is more of a confirmation of the "status quo" rather than a turning point; what will truly change the market's rhythm is whether inflation trends can break through the current stalemate in a meaningful way.