U.S. August CPI rose 3.4% year-over-year and 0.4% month-over-month, matching Dow Jones consensus estimates, while core CPI increased 2.4% annually and 0.3% monthly. The monthly core reading exceeded forecasts by 0.1 percentage point. Zach Pandl, Grayscale's head of research, said the inflation data could increase the probability of a Federal Reserve rate hike and create a short-term speed bump for the crypto market, although he expects any pullback to be limited. He also said a correction could give investors who missed August's sharp rally a new buying opportunity. The data arrived before next week's Federal Open Market Committee (FOMC), the Federal Reserve's rate-setting committee, meeting. Inflation has declined from its 2022 peak but remains above the Fed's 2% target, with fuel costs accounting for roughly one-third of August's CPI gain. A rate increase could intensify tensions with President Donald Trump, who has called for rate cuts and pressured the Fed's independence. Higher rates typically raise the discount rate applied to risk assets, including bitcoin, putting downward pressure on crypto prices.