Inflation Fails to Cool: Rate Hike Looms for Federal Reserve

The Federal Reserve's decision to raise interest rates is gaining momentum as inflation data continues to show no signs of cooling down. According to the Bureau of Labor Statistics, consumer price inflation excluding energy and food rose by 0.3% last month from the previous month, exceeding the anticipated 0.2%. The core CPI also increased by 2.4% from a year earlier, while overall consumer inflation measured 3.4%.

Seema Shah, chief global strategist at Principal Asset Management, believes that the latest data 'all but locks in a Fed rate hike next week.' She added that policymakers are likely to conclude that more than one hike will be needed to re-establish price stability, given the prolonged period of above-target inflation.

However, not all economists agree. Oxford Economics analysts estimate core PCE for August rose by a 'benign' 0.2%, which could allow the Fed to skip a rate hike next week. However, they noted that the decision is on a 'knife's edge,' and several other economists forecast a higher core PCE reading.