U.S. PPI Inflation Comes In Hot At 3%, Bitcoin Falls

The U.S. Producer Price Index (PPI) inflation data for December has come in way above expectations, signaling that inflation continues to persist. Bitcoin fell following the U.S. PPI inflation data, which is bearish as it could further delay rate cuts.

PPI Inflation Rises To 3% In December YoY

Bureau of Labor Statistics data shows that producer prices rose to 3% year-over-year (YoY) in December, above expectations of 2.7%. Furthermore, the PPI rose to 0.5% month-over-month (MoM), above expectations of 0.2%.

Meanwhile, core PPI inflation rose to 3.3% YoY, above expectations of 2.9%, though it is down from the November PPI data, which came in at 3.5%. Meanwhile, the core PPI rose to 0.7% MoM in December, way above expectations of 0.2%.

The Bitcoin fell following the release of the inflation data, trading at around $82,000 at press time. The leading crypto had briefly climbed to $83,000 earlier in the day following Trump’s nomination of Kevin Warsh as the next Fed chair. BTC is down over 2% and recently fell to as low as $81,000, marking a new yearly low for the crypto asset.

The hot PPI inflation print comes just days after the Fed held interest rates steady over concerns that inflation remains somewhat elevated and trending above their 2% target. Fed chair Jerome Powell had warned that they need to keep an eye on inflation.

He further remarked that he expects the Trump-tariff-induced inflation to peak around mid-2026. The FOMC already signaled that it is in no rush to make more rate cuts after three consecutive cuts last year. The committee noted that the labor market is stabilizing, a development that puts them in a good position to adopt a wait-and-see approach.

The PPI inflation would further strengthen the case for the Fed to hold rates steady while they monitor how inflation trends. It is worth noting that the November PCE inflation, released last week, came in at 2.8%, well above the Fed’s 2% goal.

Chris Waller Makes a Case For Rate Cuts Despite Elevated Inflation

Amid the release of the PPI inflation data, Fed Governor Chris Waller has advocated for further cuts, explaining why inflation shouldn’t be too much of a concern. He stated that although inflation is elevated by tariff effects, the appropriate monetary policy is to look through these effects as long as inflation expectations are anchored, which he believes they are. Waller further remarked that inflation, excluding tariff effects, is running close to the FOMC’s 2% target and on a sustainable path to reach that goal.

On the other hand, the Fed governor, who was one of the two dissents at this week’s FOMC meeting, argued that the labor market remains weak, as the unemployment rate has risen since the middle of last year, while payroll gains in 2025 were very weak. He noted that, compared with the prior ten-year average of about 1.9 million jobs created per year, payrolls increased by just under 600,000 in 2025. “This does not remotely look like a healthy labor market,” Waller declared.

Waller believes that the interest rates should be closer to neutral, with inflation just slightly above the Fed’s 2% target, and the labor market still weak. He noted that the median FOMC participant estimate for the neutral rate is 3%, indicating that the Fed can still make up to a 75-basis-point (bps) cut.