Fed Rate Hike Odds Soar as US Inflation Hits 3.7%

US inflation data released on Wednesday showed that consumer prices rose 3.7% in July from a year earlier, exceeding economist expectations.

The personal consumption expenditures price index, also known as Core PCE, is the Federal Reserve's preferred gauge of inflation and accelerated from a 3.6% increase in June to 3.7%, according to government data.

This development has strengthened bets on a US Fed rate hike, with markets now pricing in a 44% probability of an interest-rate increase at the next policy meeting in September, up from around 36% before the inflation report.