Elevated Inflation Keeps Pressure on Fed to Raise Rates

U.S.inflation stayed stubbornly high in August, bolstering the case for the Federal Reserve to raise interest rates at its meeting next week.The Consumer Price Index report, released on Friday, showed overall inflation remained elevated at an annual pace of 3.4 percent, after a 0.4 percent rise from July.

“Core” inflation, which strips out volatile food and energy items, rose 0.3 percent in August, or 2.4 percent from a year earlier.The data is factoring heavily into the Fed’s upcoming policy deliberations, set for Tuesday and Wednesday.Policymakers stipulated this summer that if inflation did not soon moderate, they stood ready to raise rates.

Officials have yet to precisely define what “soon” means, but many have run out of patience.The Fed’s preferred inflation gauge is the Personal Consumption Expenditures price index, which will be released Sept.30.

It has shown the Fed missing its 2 percent target for over five years.Officials also closely scrutinize the C.P.I.

report and other metrics for a comprehensive picture of the backdrop.Core measures are paid the most attention given that they are seen as a reliable way to track how persistent inflation is proving to be.Policymakers are also digesting a multitude of new risks.

The global price of oil is back up above $100 a barrel as the Iran war continues to disrupt supply.President Trump has reignited a trade war with Canada.

And on Wednesday, he vowed to distribute a $5,000 check to every American adult if Republicans keep control of Congress in the November midterm elections, a bump to economic activity that could further fuel inflation.In the wake of Friday’s data release, traders in federal funds futures markets now see 90 percent odds that the Fed raises rates by a quarter of a percentage point next week.Since January, rates have stood at a range of 3.5 percent to 3.75 percent.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you fo...