Fed Set for Rate Hike as Inflation Remains Stubborn

The Federal Reserve is expected to raise interest rates at its upcoming meeting, with odds of a hike jumping to about 87% after recent inflation data. The Consumer Price Index (CPI) rose 3.4% in August from a year ago, and core inflation, which excludes volatile food and energy prices, increased by 2.4%. This uptick in inflation has reinforced expectations that the Fed will raise its federal funds rate.

Trump's recent threats to stop trading with certain countries if there's no interest-rate cut are unlikely to sway the Fed's decision, as the central bank is politically independent and doesn't require presidential approval.

Experts believe a rate hike is 'all but assured,' with some predicting that policy rates could peak near 4.5% next year. The primary driver of rising long-term bond yields has been oil prices, which have boosted expectations for multiple rate hikes in the coming quarter.