The Federal Reserve is widely expected to raise interest rates Wednesday, in a show of its determination to attack stubborn inflation.Investors are betting that the central bank will raise its benchmark interest rate by a quarter percentage point to a range between 3.75% and 4%.That would be the first rate increase in more than three years, making it more costly to borrow money to buy a car, grow a business or carry a balance on a credit card.The U.S.
war with Iran has rekindled inflation, pushing oil and gasoline prices higher and driving the price of diesel fuel into record territory.Higher interest rates won't automatically bring lower prices at the pump, but they do signal the central bank's commitment to restoring price stability."The responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank," Fed Chairman Kevin Warsh told an audience in Jackson Hole, Wyo., last month.
"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed.Otherwise, we have work to do."Warsh's remarks were widely interpreted as a hawkish signal that the Fed would raise interest rates unless the economy experienced a marked slowdown in inflation."It is time to put up, or shut up," inflation forecaster Omair Sharif wrote in a research note.
"You cannot give a speech like you did at Jackson Hole and not support a rate hike at the next meeting.You will either have to back up those words or end up as the boy who cried wolf."Annual inflation was clocked at 3.4% in August, according to the cost-of-living index released by the Labor Department last week.
Prices rose a sharp four-tenths of a percent between July and August, with a surge in gasoline prices accounting for more than a third of the total monthly increase.The price of diesel fuel has reached an all-time high, topping $6 per gallon.That has the potential to raise the cost of many other goods that have to be transported by truck or train.Since Ap...