US Inflation Rises to 3.7% in September, But Markets Still Expect Fed Pause This Month
US consumer prices grew faster than anticipated in September, driven higher by a sharp rise in fuel costs. The consumer price index increased 0.6% from the previous month and 3.7% on an annual basis, up from 3.4% in August. Core inflation, which excludes food and energy costs, reached 2.6% over the past year. Gasoline prices jumped 9.1% month-over-month, representing more than half of the overall monthly rise in consumer inflation.
Despite the higher inflation figures, financial futures continue to project a 66% chance that the Federal Reserve will maintain its target interest rate at 3.75% to 4.00% during its October 27-28 meeting. Central bankers previously raised rates by a quarter percentage point last month to curb price pressures, ending a series of rate cuts that began in September 2024. However, traders still price in roughly a 63% probability of another quarter-point rate increase at the December meeting.
Persistently elevated interest rates increase borrowing costs and boost yields on traditional debt instruments, which can reduce investor demand for higher-risk holdings. Bitcoin (BINANCE:BTCUSDT) traded down 1.00% at 80,870 USDT as financial markets weighed the likelihood of sustained monetary policy pressure through the end of the year.
Key points
- US CPI rose 0.6% in September from August and 3.7% from a year ago, led by a 9.1% monthly jump in gasoline prices.
- Core CPI, excluding food and energy, climbed 2.6% year-over-year in September.
- Futures markets show a 66% chance the Federal Reserve leaves rates unchanged at 3.75% to 4.00% in October.
- Traders price in a 63% probability of a quarter-point rate hike in December.
- Bitcoin fell 1.00% to 80,870 USDT as higher interest rates weigh on risk assets.
Written by our AI from expert market sources across the web. It can contain mistakes: check the facts before acting on them. Write-ups powered by the free AI API at FreeTheAI.org
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What was the US inflation rate in September 2026?
The US consumer price index rose 3.7% year-over-year and 0.6% month-over-month in September 2026, driven largely by a 9.1% monthly surge in gasoline prices. Core CPI, which excludes food and energy, increased 2.6% from a year earlier.
Will the Federal Reserve raise interest rates in October 2026?
Futures markets indicate roughly a 66% probability that the Federal Reserve will hold its benchmark interest rate steady at 3.75% to 4.00% at its October 27-28 meeting. However, markets price in a 63% chance of a rate hike in December.
How does higher US inflation affect Bitcoin?
Higher inflation can lead the Federal Reserve to keep interest rates elevated. Higher rates increase borrowing costs and boost bond yields, which tends to reduce investor demand for riskier assets like Bitcoin.