US Inflation Surges Past Fed Target, Rate Hike Odds at 85%

The US inflation rate for August surpassed the target pace set by the Federal Reserve. The headline consumer price index rose to 0.4% month-on-month and 3.4% year-on-year, exceeding expectations.

Core inflation, which excludes food and energy, increased to 0.3% month-on-month and 2.4% year-on-year. This rate is higher than the 0.2% monthly pace expected by analysts.

Fed funds futures imply an 85% probability of a 25 basis point rate hike in response to these inflation numbers, a move that market participants widely expect.