Fed Rate Hike Odds Rise as Inflation Data Shows Slight Increase

The Federal Reserve is likely to raise short-term borrowing costs at its meeting next week after recent inflation data showed producer prices rose 5.4% in the 12 months through August.

Traders now estimate a 70% chance of a quarter-point rate hike, up from about 65% before the data was released.

The Producer Price Index (PPI) data showed some inflation indicators are picking up again due to renewed hostilities in the Middle East and increased demand for electronics.

The US Consumer Price Index report on Friday will provide further insight into the inflation picture, which could influence the Fed's decision.