Fed Seen Likely to Raise Rates Amid Hotter-Than-Expected Inflation

The US Federal Reserve is likely to raise interest rates next week after inflation data showed hotter-than-expected readings.

According to a report by the Bureau of Labor Statistics, core consumer price inflation rose 0.3% last month from the previous month, exceeding economists' expectations of 0.2%. The year-over-year core CPI also increased 2.4%, while overall consumer inflation measured 3.4%.

The data, combined with a stronger-than-expected August producer price index and soaring oil prices above $100 a barrel, suggest that inflation is still moving in the wrong direction for the Fed's target of 2%.

Nationwide Chief Economist Kathy Bostjancic wrote that 'the renewed march higher in oil, gasoline, and diesel prices add to concerns that higher energy prices could spill over to other goods and services and inflation expectations.'