Fed Chair Kevin Warsh under presssure to hike rates as inflation fails to cool: Time to put up or shut up

Back-to-back hotter-than-expected inflation readings may disappoint the majority of US central bankers who had been counting on price pressures easing on their own, setting the table for an interest-rate hike at the Federal Reserve’s meeting next week and potentially more to follow.US consumer price inflation excluding energy and food, a key measure of underlying inflation, rose 0.3% last month from the previous month, the Bureau of Labor Statistics reported, more than the 0.2% that economists had anticipated.From a year earlier, core CPI rose 2.4%, while overall consumer inflation measured 3.4%.Coupled with a stronger-than-expected August producer price index released on Thursday and oil prices that have soared above $100 a barrel amid renewed hostilities in the Middle East, the latest data suggest inflation by the Fed’s targeted measure, above the target 2% for 5-1/2 years, is again moving in the wrong direction.“Today’s clean 0.3% core CPI print, combined with the sharp rise in energy prices and persistent tensions with Iran, all but locks in a Fed rate hike next week,” wrote Principal Asset Management chief global strategist Seema Shah.

“After half a decade of above-target inflation, policymakers are likely to conclude that more than one hike will be needed to re-establish price stability.”The Fed has left its policy rate in the 3.50%-3.75% range all year, including in a 9-3 vote in July that signaled rising sentiment inside the Fed that higher rates were already needed.Last month at the Kansas City Fed’s annual gathering in Jackson Hole, Wyo., Fed Chairman Kevin Warsh said he and his fellow central bankers may need to act if they don’t have confidence that underlying inflation is moving toward 2% “clearly and at sufficient speed.”Economists Friday said the August data does not appear to meet that bar.“For the Fed, it is time to put up, or shut up,” Inflation Insights founder Omair Sharif wrote.“You cannot give a speech like you...