US Inflation Stuck Above Target, Fed's Rate Hike Decision Looms Large

The US Federal Reserve's preferred inflation measure, Core Personal Consumption Expenditures (PCE) index, excluding food and energy, has been stuck above its 2% target for over five years. The latest update came in at +3.3% year-on-year, unchanged from the previous month but significantly higher than the target.

This is not the only inflation measure that's causing concern - Core PPI (Producer Price Index), which measures wholesale inflation, rose to +4.2% in July. This can lead to increased costs for consumers and reduced profitability for companies.

The Fed's decision on interest rates will be a closely watched topic, especially after the recent drop in market rate hike expectations due to lower than expected inflation readings. However, with weak Non-Farm Payroll reports and disappointing quarterly earnings updates from major retailers, it remains to be seen how the economy will respond to higher borrowing costs.