US Inflation at 3.4% Hands the Fed a Rate Hike It Cannot Refuse - Martin Cid Magazine

For months, the Federal Reserve’s policymakers held a private debate about September: whether a global energy shock severe enough to keep prices persistently above target would finally force their hand. This morning’s data from the Bureau of Labor Statistics closed that debate. Consumer prices rose 3.4% in August compared with the same month a year earlier — above what economists had forecast and well above the Fed’s 2% target. Federal funds futures markets moved sharply on the release, pushing the implied probability of a 25-basis-point hike at the September 16 meeting above 90%. Gasoline is doing most of the work. The energy index climbed 16.3% over the past twelve months, and within it, gasoline prices surged 27.4% annually.