- Fundstrat’s Tom Lee said a new PCE calculation set for Sept. 30 could reduce core inflation by 0.2 to 0.4 percentage points.
- Lee argued the revision would show the Fed tightened too early, making a shift toward less restrictive policy likely.
- He claimed such a policy pivot would be bullish for Bitcoin, citing the market’s recent response to the Fed’s last rate hike.
Tom Lee of Fundstrat Global Advisors told CNBC on Friday that a government revision to the PCE inflation index, due Sept. 30, could lower core readings enough to force a less hawkish Federal Reserve. The change, he said, might subtract 0.2 to 0.4 percentage points from the annual rate, potentially pulling core PCE down to roughly 3%. Lee argued the shift would prove the Fed hiked rates too soon, and that a move toward neutral policy would support Bitcoin.
Consequently, Lee claimed any decline in inflation would stem from existing policy, not the Fed’s recent actions. “If inflation starts to decline, this is not because of the Fed hikes that happened last week,” he said. CNBC’s Scott Wapner questioned whether altering the methodology would change the underlying inflation reality.
Meanwhile, Lee contended the components driving the gap, such as flash memory prices, don’t affect most consumers. “The average person, the only real expense they have for memory is the phone they’re carrying in their pocket,” Lee added. The market’s reaction to the Fed’s last hike, which raised the target range to 3.75% to 4.00%, already suggested the central bank had reached “maximum pain,” according to Lee. He predicted policymakers would likely walk back the hike, a move he described as bullish for crypto.
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