Inflation Report Pivotal for Fed Rate Hike Decision

Wall Street is divided over whether the Federal Reserve will raise interest rates next month, but one thing is certain: this week's inflation report will play a crucial role in shaping the Fed's decision.

The upcoming Consumer Price Index (CPI) release on Wednesday has traders pricing in a roughly 50% chance of a quarter-point increase, according to swaps-market activity. A hotter-than-expected print could sharply boost the chances of a hike, while another soft reading would give policy makers room to keep waiting.

Molly Brooks, a US rates strategist at TD Securities, notes that the inflation report will have a significant impact on the Fed's next move.