The United States announced a January core PCE year-over-year rate of 3.1%, meeting expectations but still well above the Federal Reserve's 2% target.

U.S. January Core PCE Price Index Year-over-Year Rises to 3.1%, Monthly Increase of 0.4%, Meeting Market Expectations but Still Far from the 2% Target. The “higher for longer” narrative—maintaining high interest rates—continues to strengthen, potentially putting macro pressure on the crypto market.
(Background: Will December U.S. rate cuts change? October Core PCE hits six-month high.)
(Additional context: September FOMC minutes reveal hawkish signals: two more rate cuts expected by 2025, but inflation remains insufficiently restrained.)

On March 13, the U.S. released the latest data showing that the January Core Personal Consumption Expenditures (PCE) Price Index YoY was 3.1%, in line with market expectations of 3.1%, slightly up from December’s 3.0%. Monthly growth remained at 0.4%, unchanged from the previous month. The data further dampens expectations of rate cuts and reinforces the narrative of the Federal Reserve keeping rates high for longer.

January Data: Service and Goods Prices Both Rise

The main driver in this data is the service sector. January service prices were elevated, mainly due to increased physician service fees and higher investment management costs. On the goods side, core goods prices rose due to heightened demand related to AI, with computer software and accessories prices strengthening, adding upward pressure.

Notably, December’s core PCE YoY was 3.0%, exceeding the market expectation of 2.9%, and January’s figure rose again to 3.1%, indicating persistent inflation issues.

The Federal Reserve’s policy rate remains between 3.5% and 4.0%. Compared to the 2% inflation target, the 3.1% core PCE suggests that the cooling process has stalled or even slightly reversed.

Oxford Economics analysts hold a relatively cautious view, believing that the January core inflation increase does not signal a trend for the entire 2026 year. Some of the rise can be attributed to seasonal factors, as routine service price adjustments at the start of the year are common and should not be overinterpreted.

Potential Impact on the Crypto Market

The link between core PCE and the crypto market is as follows:

• High core PCE: The Fed is inclined to keep interest rates high or even raise them, strengthening the dollar, tightening liquidity for risk assets (tech stocks, cryptocurrencies), and exerting downward pressure.
• Low core PCE: Rate cuts become possible, market liquidity loosens, and risk assets tend to benefit.

On the day of the data release, the crypto market also faced options pressure, with approximately 27,000 Bitcoin (BTC) options contracts expiring, totaling about $1.9 billion in notional value. The put-to-call ratio was 0.97, indicating a neutral to slightly bearish sentiment, with the largest pain point at $69,000.

Hot macro data combined with options expiry suggests investors should be cautious of short-term volatility risks.