Inflation Remains High as Fed Weighs Rate Hikes

The US economy remains under pressure as inflation continues to rise, with the Commerce Department reporting that prices increased by 3.7% in July compared to a year earlier.

This marks the same rate of inflation as June and is above the Federal Reserve's target of 2%. The personal consumption expenditures price index (PCE) is running hotter than the consumer price index (CPI), partly due to lower weight given to rental costs, which have been cooling steadily in recent months.

Fed Chair Kevin Warsh acknowledged that US data show inflation has cooled a bit, but 'they do not tell me that underlying trends have meaningfully improved.' He suggested the central bank may need to raise interest rates to bring inflation down to its 2% target.