US PPI Inflation Rises 6.5% as Markets Weigh Size of December Fed Rate Hike

Producer prices are the Fed's companion gauge to CPI, and traders use the monthly print to game out the next rate decision. October's reading rose 0.3% on the month and 6.5% annually, both just under the 0.4% and 6.6% economists had forecast. BofA's own rate-path model, still pencilling in hikes for December 2026, January and March 2027, shows how unsettled the policy debate remained even as this softer-than-expected report nudged odds toward restraint at the Fed's December meeting.

The reaction split by asset and by hour. Bitcoin pushed above $70,000 on the initial read, then reversed to end the day down roughly 4%, a round trip that punished anyone who chased the first move. Ether slipped under $2,000, XRP held near $1, and Pi Network traded lower alongside them. Short-term traders who sized positions off the headline number, rather than the intraday reversal, took the loss; those waiting for confirmation from rate markets fared better.

Crypto has spent years marketed as an inflation hedge, yet a print missing forecasts on both counts produced a sell-off in ether, XRP and Pi Network before bitcoin and ether edged back up only once rate-hike odds held firm. That is the behavior of a rate-sensitive risk asset tracking Fed expectations, not an independent store of value decoupled from monetary policy. The gap between the marketing and the market action is worth naming plainly rather than glossing over.

The next signal is the Fed's December policy meeting, where officials will weigh this cooler-than-forecast PPI against other data before deciding on a hike, a hold, or the start of cuts. BofA's call for further increases stretching into January and March 2027 implies the central bank sees more tightening ahead regardless of one soft print; a dovish surprise in December would force that forecast, and the positioning built around it, to be revisited quickly.