Fed's Hike Prospects Rise as Inflation Rate Edges Up

The Federal Reserve's interest-rate hike prospects have gained momentum after a recent report showed inflation in July was stronger than expected.

The Commerce Department reported that the 12-month gain in the personal consumption expenditures price index, which the Fed targets at 2%, rose to 3.7% last month from 3.6% in the previous month.

Core PCE inflation, which strips out volatile food and energy prices, remained steady at 3.3% from a year earlier, matching June's rate.

Navy Federal Credit Union chief economist Heather Long commented that 'the United States still has an inflation problem,' but the latest data give Fed Chairman Kevin Warsh time to wait and see before making any decisions on interest-rate hikes.