Fed Taps Brakes on Rate Hike Timing Amid Sticky Inflation

The Federal Reserve is shifting its focus from whether to raise interest rates again to when it will do so, as stubborn inflation and consistent economic growth continue.

In August, prices rose 3.4% compared to a year ago, still above the Fed's target of 2%, but an improvement from July's rate of 3.7%. Core prices, which exclude food and energy costs, were up 3% year-over-year.

The economy grew at a healthy 2.2% pace in the second quarter, despite slowing down from the first quarter. Consumer spending jumped 0.9% in August and 0.6% after adjusting for inflation, driven by increased spending on goods and services.

Fed officials are divided on how quickly to raise rates, with some arguing they need to act soon to combat inflation, while others believe the economy can withstand higher rates. Federal Reserve Bank of New York president John Williams said officials 'have time to gather more information' but still signaled further hikes will be needed amid an energy shock and stubborn inflation.