Gasoline likely to boost US consumer prices in August
The Federal Reserve is expected to raise interest rates this week following a firmer than forecast monthly core CPI. Market implications now suggest a 90% probability of a 25bp hike at the FOMC meeting. This comes as US Treasury 2-year yields hit a new cycle high and the 10-year yield stands at 4.98%. While President Donald Trump continues to advocate for the lowest interest rates in the world, Fed Chair Kevin Warsh faces increasing pressure to tighten borrowing costs to combat inflation driven by energy spikes.
What changed
Market odds for a rate hike increased to 90% as core CPI exceeded forecasts and 2-year Treasury yields reached a cycle high.
Live updates
-
Markets anticipate Fed rate hike as US consumer prices rise
The Federal Reserve is expected to raise interest rates this week following a firmer than forecast monthly core CPI. Market implications now suggest a 90% probability of a 25bp hike at the FOMC meeting. This comes as US Treasury 2-year yields hit a new cycle high and the 10-year yield stands at 4.98%. While President Donald Trump continues to advocate for the lowest interest rates in the world, Fed Chair Kevin Warsh faces increasing pressure to tighten borrowing costs to combat inflation driven by energy spikes.
Why it matters
Renewed fighting in the Middle East pushed gasoline and diesel prices higher, causing August consumer prices to rise 0.4%. These inflationary pressures are influencing global central banks, including the RBI, which may hike rates in October and December. The Fed's upcoming decision will determine the cost of borrowing across US markets.
What is confirmed
- The US 10-year Treasury yield is at 4.98%.
- The Federal Reserve is scheduled to make an interest-rate decision during the week of September 14.
Still unconfirmed
- US Treasury 2-year yields have reached a new cycle high.
What to watch next
- The FOMC interest-rate decision this week
- The Reserve Bank of India rate announcement in October
confidence 85%Sources used for this update (6)
- finance.yahoo.com — Trump Pushes Fed to Lower Rates Despite Pressure to Raise Them
- www.marketscreener.com — Week Ahead for FX, Bonds : All Eyes on Fed Rate Decision
- en.bloomingbit.io — Why the US Treasury Isn’t Buying Bonds Blindly: The Real Purpose of Buybacks
- www.interest.co.nz — Breakfast briefing: Higher yields are here to stay
- www.livemint.com — Loan interest rates, EMIs to rise? Two back-to-back 25 bps repo rate hike from RBI soon?
- www.interest.co.nz — NZD can't maintain a small push higher
-
August inflation accelerates as Middle East conflict spikes fuel costs
US inflation accelerated in August, driven by a spike in gasoline and fuel prices following renewed fighting in the Middle East. Consumer prices rose 0.4% month-on-month, matching estimates, while wholesale prices also increased by 0.4%. These energy costs pushed consumer inflation to a three-month high and caused diesel prices to reach a new peak. Market reactions following the CPI data have pushed the odds of a Federal Reserve interest rate hike to 85%, while Bitcoin rallied past $79K.
Why it matters
Rising affordability challenges coincide with midterm elections occurring in seven weeks. The Federal Reserve is currently weighing whether to raise interest rates to combat the unexpected acceleration in core inflation.
What is confirmed
- US inflation accelerated in August due to rising fuel prices linked to Middle East conflicts.
- Consumer prices rose 0.4% month-on-month in August.
- Wholesale prices increased by 0.4% in August.
- Midterm elections are seven weeks away.
Still unconfirmed
- Annual core inflation reached a 66-month low.
What to watch next
- Federal Reserve decision on interest rate hikes
- Midterm election voter turnout regarding economic affordability
confidence 90%Sources used for this update (5)
- www.arkansasonline.com — US inflation accelerates in August
- auto.economictimes.indiatimes.com — No relief from inflation as Middle East clashes lifts fuel prices to painful levels
- wtop.com — America In Focus: inflation accelerated in August, home sales weaken and diesel prices soar
- www.livemint.com — The week ahead in numbers: Inflation trajectory, export growth, NSE IPO
- blockonomi.com — Bitcoin (BTC) Price Rallies Past $79K Following Inflation Data — What CPI Numbers Mean for Crypto
-
Gasoline Costs Push US Consumer Prices Up in August
US consumer prices rose by 0.4% month-on-month in August, matching estimates as energy costs climbed. Wholesale prices also increased by 0.4% in August as expected, driven by rising energy costs and oil prices continuing to climb. Gasoline prices spiked following renewed fighting in the Middle East, specifically during an Iran war that drove energy costs higher and pushed diesel prices to a fresh high. This surge in energy prices led consumer inflation to hit a three-month high while the core measure unexpectedly accelerated, squeezing Americans finances and raising questions about whether interest rates should be raised.
Why it matters
Inflation staying hot in August highlights the ongoing vulnerability of American consumers to global energy shocks. The jump in oil and gasoline prices stems directly from conflicts in the Middle East. Policymakers now face renewed pressure as these stubborn price increases ripple through both wholesale and consumer sectors.
What is confirmed
- US consumer prices rose by 0.4% month-on-month in August, matching estimates.
- Wholesale prices rose 0.4% in August, as expected.
- US consumer inflation hit a three-month high in August as energy prices rose.
Still unconfirmed
- Diesel prices hit a fresh high.
What to watch next
- Decisions regarding whether to raise interest rates in response to the August inflation data.
- Further developments in the Middle East conflict affecting oil and gas supplies.
confidence 95%Sources used for this update (12)
- CNBC — Wholesale prices rose 0.4% in August, as expected
- CNN — Wholesale inflation picked up in August, as energy costs kept rising | CNN Business
- Bloomberg.com — Key Gauge of US Producer Prices Rises Less Than Forecast
- AP News — US wholesale prices rise in latest sign of stubborn inflation as oil prices continue to climb
- Reuters — Gasoline likely to boost US consumer prices in August
- ABC News - Breaking News, Latest News and Videos — Inflation report to show latest prices as Iran war pushes up gas costs
- Axios — Inflation stays hot in August as Iran war drives energy costs higher
- Investing.com — U.S. consumer prices rise by 0.4% month-on-month in August, matching estimates
- BBC — Diesel prices hit fresh high
- USA Today — Prices rose in August. Is it time to raise interest rates?
- finance.yahoo.com — August Consumer Inflation Hits Three-Month High as Core CPI Unexpectedly Accelerates
- www.wfmj.com — US inflation accelerated last month as gas prices spiked, squeezing Americans' finances