Fed Rate Hike Looms as US Inflation Remains Hot

The US inflation rate remains stubbornly high, justifying a potential interest rate hike by the Federal Reserve. The latest data shows that August's consumer price index (CPI) rose 0.4% month-on-month and 3.4% year-on-year, meeting market expectations. However, the core inflation index, which excludes food and energy prices, increased at an even faster pace of 0.3%/2.4%. This is a concern for the Fed, as it indicates that underlying price pressures are still strong.

According to James Knightley, the rising core inflation rate suggests that the Fed will push for a rate hike next week. A majority of the Federal Open Market Committee (FOMC) is likely to agree with this move. The cooling housing market and weak wage growth provide some relief on corporate costs, but these factors are unlikely to offset the overall inflation trend.