Surprise CPI Reading Puts Warsh in Tight Spot Ahead of FOMC Meeting
A surprise reading on US inflation has put Federal Reserve Governor Kevin Warsh in a tough spot ahead of next week's key monetary policy meeting.
The August Consumer Price Index (CPI) report showed underlying price growth at 0.29% on the core measure, exceeding consensus estimates by nearly a full tenth and outpacing the unofficial whisper number of 0.22%
Communication, hotel rates, and plane tickets contributed to the monthly gain, as well as new and used cars.
The core CPI pace slipped to 2.4% year-over-year (YoY), while the headline index rose 0.4% from July, with more than a third of that increase attributed to a near 4% jump in gasoline prices
Two-year US yields were 90 basis points wide to Effective Federal Funds Rate on Thursday, reflecting market conviction that Warsh will be unable to hold the line against inflationary pressures.