Inflation Report May Decide Fed Interest Rate Hike Fate

Federal Reserve officials are split on whether to hike interest rates next week, with Friday's inflation report potentially swinging their decision either way.

The Bureau of Labor Statistics is set to release its August inflation numbers on Friday, which could be the deciding factor for the Fed. Analysts expect headline inflation to have ticked down slightly to 3.3% from 3.4%, but this would still be above the Fed's 2% target.

Higher gas prices will likely push inflation back up next month when September's data is released, with the nationwide average cost of a gallon of gas on Thursday jumping 7% from a month ago to $4.28. This renewed fighting in the Middle East has pushed up energy costs, which could spread through more of the economy.

Kathy Bostjancic, chief economist at Nationwide, said that 'this is not one and done' and that tensions in the Middle East may be a prolonged disruption to oil prices.