Fed Ponders Timing of Next Rate Hike Amid Stubborn Inflation
Stubborn inflation and strong economic growth are shifting the Federal Reserve's focus from whether to hike interest rates to when.
The Fed has been watching inflation climb at a rate of 3.4% in August compared to last year, still above its target of 2%. Core prices also rose by 3%, excluding volatile food and energy categories.
Despite rising prices and expensive fuel, consumer spending continues to grow, increasing by 0.9% in August and 0.6% after adjusting for inflation. The economy's growth rate slowed to 2.2% in the second quarter but remains strong.
The rapid development of artificial intelligence has been a driving force behind economic growth, with business investment rising by 9% in the second quarter when excluding housing. However, this AI boom is also contributing to inflation as demand for computer chips and other tech goods increases.