US Inflation Surges Ahead of Fed Rate Decision

The US inflation rate has surpassed expectations, putting Federal Reserve Chair Kevin Warsh in a difficult position ahead of the September 15-16 interest rate meeting. The consumer price index rose by 0.4% month on month and 3.4% year on year, while the core measure increased by 0.3%. This data has led investors to expect the Fed to raise rates.

Warsh previously stated that inflation exceeds the regulator's 2% target, making prices a top priority. However, some officials, such as Christopher Waller, believe there are signs of disinflation and may support keeping interest rates unchanged if this trend continues.

The market interest rate has risen across the yield curve since Warsh took over, with the 10-year US Treasury bond yield reaching 4.95%. President Donald Trump has called on Warsh to lower rates, while some analysts suggest he might not raise rates before the November 3 midterm elections due to an informal political arrangement.