US Economy Faces Rising Inflation Pressures as Midterm Elections Loom

The US economy is facing rising inflation pressures as the midterm elections approach, sparking market bets on further interest rate hikes by the Federal Reserve.

A recent report from S&P Global showed that the US Composite Purchasing Managers' Index (PMI) output index for September surged to its highest level since July 2021, indicating robust business activity. However, the survey's measure of corporate input costs rose to a near four-year high, suggesting that inflationary pressures have not subsided.

The energy market also contributed to concerns about inflation, with oil prices rising by $3.83 or 3.86% to settle at $103.08 per barrel, and the average price of diesel exceeding $6.50 per gallon.

Federal Reserve Governor Barr stated that the Fed might need to raise interest rates further against the backdrop of rising inflation risks and a strong economy. He noted that risks to achieving the inflation target have increased while risks to the labor market have diminished, implying that at least two more rate hikes are needed.