U.S. inflation showed signs of slowing in July, aligning with economists’ estimates and paving the way for a possible interest rate cut.

The U.S. Consumer Price Index (CPI), a widely analyzed measure tracking the cost of a broad basket of goods and services, increased slightly by 0.2% month-over-month in July, leaving the 12-month inflation rate at 2.9%, according to a report released Wednesday by the Labor Department’s Bureau of Labor Statistics.

These results were in line with forecasts from economists surveyed by Dow Jones, which had predicted readings of 0.2% for the month and 3% for the year, according to CNBC. The annual reading, slightly below estimates and down from June’s 3%, is the lowest since March 2021.

The core CPI, which excludes food and energy costs, also showed a modest increase of 0.2% in July, matching expectations and slightly above the 0.1% increase from the previous month. The year-over-year core CPI was 3.2%, in line with estimates and slightly lower than June’s 3.3%.

Inflation data has been moving progressively closer to the Fed’s 2% annual target. The latest reading supports the narrative for an upcoming interest rate cut in September, as investors anticipate.

Fed officials have signaled their willingness to ease rates, though they have not committed to a specific timeline or speculated on the pace of the cuts.

The Fed raised interest rates rapidly to combat inflation, which reached multi-decade highs in 2022 after the COVID-19 pandemic, and has not cut rates since. Rates have remained at a 23-year high within the 5.25% – 5.5% range for over a year.

Bitcoin Slides Below USD $61,000

The cryptocurrency market did not respond positively to the inflation news, as Bitcoin slipped below USD $61,000 after the report’s release. This downturn was mirrored by other major cryptocurrencies, which are currently showing declines of nearly 1% over the last hour.

In contrast, gold surged to $2,474.04 an ounce in Wednesday morning trading, approaching record highs, as reported by Reuters.

Earlier in the week, Bitcoin experienced its fastest pace of decline in several years, plunging to the USD $49,000 area amid concerns about a slowing U.S. labor market and fears of an economic recession. The situation was further exacerbated by tensions in the Middle East and a rate hike announced by the Bank of Japan.

The digital asset market has shown signs of recovery from last week’s downturn, although volatility persists. Bitcoin is hovering around USD $60,900 at the time of publication, up 3.3% in the last few hours and 6.3% for the week, according to CoinMarketCap data.