Warsh's Rate-Hike Argument Gains Momentum as Inflation Holds Steady

The Federal Reserve's preferred measure of inflation, PCE, held steady at 3.7 percent in July, defying expectations and handing Fed officials a potential argument for raising interest rates.

This news was a disappointment to those hoping for a cooling trend in inflation, which would have supported the idea of a rate cut later this year.

Core PCE, which strips out food and energy prices, remained at 3.3 percent for the second consecutive month, also above forecasts.

The data arrives ahead of the Jackson Hole symposium in Wyoming, where Fed Chair Kevin Warsh will deliver a keynote address on Friday, marking the most significant rate signal the market has received before the September FOMC meeting.