Inflation Data This Week Could Tip Balance on Fed Rate Decision

The US Federal Reserve is closely watching inflation data due later this week, which could influence its decision on interest rates at its September policy meeting.

The August consumer price index report is expected to show headline inflation rose 3.4% year over year in August, unchanged from July, according to economists polled by Reuters.

Core CPI, excluding volatile food and energy prices, is forecast to have eased to 2.4% from 2.5%. The figures will be crucial after a stronger-than-expected August jobs report revived expectations for tighter monetary policy.

Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, noted that the upcoming release could prove unusually important, emphasizing whether it confirms the cooling trend seen in June and July.