Fed Rate Hike Fears Reignited by US Inflation and Oil Price Pressures
Oil prices and US inflation data have stoked fears of an imminent Federal Reserve rate hike. The consumer price index (CPI) rose 0.4 percent in August, matching analyst expectations but still above the Fed's two percent target.
The CPI reading comes a day after the European Central Bank raised eurozone borrowing costs due to energy cost pressures from the Middle East conflict. Despite this, Wall Street and European stocks saw gains on Friday, with the Dow adding one percent and the S&P 500 following behind at 0.9 percent.
Analysts such as Bret Kenwell and James Knightley offered differing views on a potential rate hike. Kenwell said that 'markets are pricing around a 90 percent probability' of an increase, while Knightley suggested it could be a one-off rather than the start of a series of hikes.
Average diesel prices in the US climbed above $6 per gallon for the first time, causing concern among transport and agriculture sectors. Brent oil dipped back to $104.72 after reaching nearly $110 per barrel earlier in the day due to reduced global demand forecasts from the International Energy Agency.