Fed rate hike hinges on two key inflation reports in the next two days
Are U.S. interest rates heading higher? Investors should find out in the next few days after digesting a pair of crucial updates on inflation.
The Federal Reserve is weighing whether to raise borrowing costs after a surge in inflation since the spring, when the U.S. attacked Iran and oil prices CL00+3.63% BRN00 +0.23% spiked. The latest reports on consumer and wholesale prices in August are primed to be the deciding factors.
The key is how much the consumer-price index (CPI) rose in August — but with a twist. Investors won’t take the headline number at face value, as higher oil prices are the chief reason an outsize 0.4% increase in consumer prices is expected.
Instead, Wall Street is focused a category known as the core rate of inflation. The core CPI omits energy and has proven to be a better predictor of long-run trends in U.S. inflation.
Place bets now - inflation and rate hike or everything stays the same.