Fed Focus Shifts to Inflation as Labour Market Strengthens

Investors are gearing up for the Federal Reserve's next policy meeting, scheduled for next week. The strong labour market report for August has reinforced the Fed's focus on inflation control.

The August Employment Situation report showed a gain of 162,000 jobs, exceeding expectations of a 45,000-job gain. The unemployment rate remained unchanged at 4.1%. July and June job revisions also added to the strong employment data.

Market analysts are now looking closely at this week's inflation reports on the Consumer Price Index and Producer Price Index to determine how Federal Reserve members will vote on interest rates. CME Fed funds futures currently indicate a 0.25% increase at the September meeting.