US Core CPI: Inflation Won't Let the Fed Rest
--- US inflation came in hotter than expected in August, with core consumer prices — stripping out food and energy — rising 0.
US Core CPI: Inflation Won't Let the Fed Rest
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US inflation came in hotter than expected in August, with core consumer prices — stripping out food and energy — rising 0.3 percent month-on-month, above the 0.2 percent forecast, according to Bloomberg. The print lands at the worst possible moment: Federal Reserve officials meet next week, and markets had spent the summer daring to hope a pause was coming.
That hope is now considerably thinner.
The report does not point to a single culprit. Services inflation remains sticky. Shelter costs have not cooled at the pace the Fed anticipated. The broader picture is a central bank that has been tightening into an economy that refuses to break cleanly, and a White House that, per Politico, has publicly dismissed concerns about structural economic risk while simultaneously promising $5,000 dividend cheques to every American adult — cheques Commerce Secretary Howard Lutnick insists will not be funded by taxpayer dollars, without explaining precisely where the money originates.
The Fed's credibility is the subtext of every number in this report. A rate hike next week would be its most consequential move in months, arriving against a backdrop of a 9/11 memorial that became a war speech, a BRICS summit dividing along energy lines in New Delhi, and bond markets that have not had a quiet session in weeks.
Treasury yields had already hit five percent earlier this week. The CPI print gives the Fed no reason to look away from that number.
The hike appears to be coming.
