FOMC Faces Collision Course as Inflation Forecast Adds Fuel to Rate Hike Debate

The Federal Reserve's August inflation forecast has put the FOMC on a collision course for its September meeting. According to CME Group's FedWatch tool, there's a nearly 55% likelihood the FOMC raises interest rates by a quarter point and roughly a 45% chance the Fed holds rates steady.

The Federal Reserve Bank of Cleveland regularly maintains estimates of various inflation gauges for the upcoming month and eventually the month after. These estimates are known as Inflation Nowcasting, which is a useful resource for investors seeking to monitor inflation.

The Bureau of Labor Statistics will release the July CPI data on August 12, at which time CPI is expected to rise roughly 0.09% for the month and be up 3.42% year over year. Core CPI, which strips out more volatile food and gas prices, is expected to have risen 0.21% in July and up 2.52% year over year.