Fed Rate Hike Odds Tumble on Inflation Gauge Uncertainty

The Federal Reserve is gearing up for its September 16 policy meeting, and markets are divided over whether officials will raise interest rates or leave them unchanged.

Economists expect key inflation readings from August's producer price reports on Thursday and consumer price reports on Friday to play a crucial role in shaping expectations.

According to Dow Jones economists, headline producer prices are forecasted to rise 0.4% in August, lifting the annual rate to 5.3%, while core CPI is expected to increase by 0.2% for an annual pace of 2.4%.

Krishna Guha, head of economics and central bank policy at Evercore ISI, notes that a few hundredths of a percentage point in core PCE could tilt policymakers toward holding rates or supporting a hike.