Inflation Data Set to Decide Fed Interest Rate Hike Fate

The Federal Reserve's next move on interest rates is uncertain, driven by two key economic reports. The Producer Price Index (PPI) and Consumer Price Index (CPI) readings for August will likely determine whether the Fed raises interest rates at its upcoming meeting.

Average mortgage rates are heading into this decision period with unusual uncertainty, according to Redfin's weekly economic update published September 8th. The data is crucial in shaping the Fed's decision on whether to raise interest rates next week.

Fed Governors Christopher Waller and Michael Barr, along with New York Fed President John Williams, offered commentary last week that pushed back against the hawkish tone Chairman Kevin Warsh struck in his Jackson Hole speech. However, each of them signaled they'd back an interest rate hike if the August CPI reading comes in hot.

The jobs report added to the complexity, with employers adding 162,000 jobs in August, roughly three times the consensus estimate. Redfin's Chen Zhao noted some of that strength was a bounce-back from an unusually weak July rather than genuine acceleration.