The September 2025 PPI report has finally been released, revealing persistent inflation that puts the Fed in a dilemma. As markets anticipate a rate cut in December, cryptos could be the big beneficiaries. Here's how this economic data influences the future of digital assets.
In brief
- The September PPI showed an increase of 0.3% over the month and 2.7% over the year, revealing persistent inflation.
- Markets are 90% expecting a Fed rate cut in December, but the lack of recent data adds major uncertainty.
- A rate cut in December could boost cryptos, while a status quo risks causing a sharp correction.
September 2025 PPI sounds the alarm: inflation remains a challenge for the Fed
The PPI for September 2025, published late due to the administrative shutdown, shows an increase of 0.3% over the month, or 2.7% over one year. Although this increase is in line with expectations, it confirms that inflation remains a challenge for the Federal Reserve (Fed). In addition, the core PPI, which excludes volatile food and energy prices, only increased by 0.1%! But, shows an annual increase of 2.9%, slightly higher than forecasts.
This situation reflects stubborn inflation, mainly driven by goods such as:
- Gasoline (+11.8%);
- Meats;
- Corn, while services remain stable.
For the Fed, these September PPI data complicate the December decision: should we prioritize the fight against inflation or support a slowing labor market? Analysts point out that this pressure on goods prices could persist, limiting the central bank's room for maneuver.
Rate cut in December: a 90% probability, but what are the risks?
Markets now estimate a 90% probability of a rate cut in December, compared to only 30% a few weeks ago. This increase in expectations can be explained by recent statements by Fed officials, such as John Williams, president of the New York Fed, who spoke of a “room for adjustment” rates. This December meeting is crucial, because it takes place in a context of economic slowdown and inflation still above the 2% objective.
However, the absence of recent CPI and employment data, delayed by the shutdown, adds a layer of uncertainty. The Fed will have to decide with incomplete information. Two scenarios emerge:
- A drop of 25 basis points, widely anticipated by the markets;
- A surprise status quo, which could trigger a brutal correction.
Investors are closely watching Jerome Powell's upcoming statements to assess risks.
December 2025: A rate cut could trigger a historic crypto rally
A Fed rate cut in December could boost the crypto market, as recent reactions show. As soon as bearish expectations increased, the total crypto market capitalization grew by 1.5%, reaching $3.02 trillion. Cryptocurrencies, uncorrelated to traditional currencies, become more attractive in an environment of a weakened dollar and increased liquidity.
Low rates are freeing capital into risky assets, like crypto ETFs, staking and DeFi. If the Fed confirms a cut and signals further easing in 2026, a widespread rally could begin. Conversely, an unexpected status quo could cause a sharp correction, with variations of ±20-30% in the 48 hours following the announcement. Bitcoin, often used as a market indicator, could benefit from an influx of institutional capital, while Ethereum would see an increase in activity on its network.
The Fed finds itself at a crossroads: cut rates in December to support the economy or maintain them to control inflation. The crypto market, sensitive to liquidity and the dollar, could benefit from monetary easing. But what will happen if the Fed surprises the markets? The answer will determine the future of digital assets in 2026.
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