Fed Rate Hike Hinges on Friday's CPI Report — SkimNews
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- Friday's inflation report is expected to show headline inflation ticking down to 3.3% from 3.4%, with monthly prices forecast to rise 0.4% from July to August, while core prices are projected to rise just 0.2% monthly and 2.4% year-over-year.
- The Federal Reserve is split on whether to hike rates at its Sept. 15-16 meeting, with Chair Kevin Warsh leaning toward a hike in a speech two weeks ago but declining to commit to a specific meeting.
- Fed Governor Christopher Waller said if Friday's report shows price increases cooling, he would support keeping rates unchanged — and some Wall Street analysts expect a core monthly reading that rounds up to 0.3% would trigger a hike, while 0.2% or lower could mean a hold.
- Oil and gas prices have spiked again on renewed Middle East combat, pushing the nationwide average gas price up 7% from a month ago to $4.28, with diesel reaching all-time highs and Labor Day gas at a record for that date.
- The 10-year Treasury yield reached a nearly three-year high on Thursday, and Treasury Secretary Scott Bessent stepped up bond buybacks in an effort to keep longer-term rates lower.
- President Trump promised $5,000 payments to every American adult if the GOP keeps its congressional majority — a move that would require congressional approval and could stoke further inflation, according to the source.
- Nationwide chief economist Kathy Bostjancic warned the Middle East disruption 'seems like it could be a prolonged' one, noting pricier jet fuel and diesel could spread through the economy into air fares and shipping costs.
Why it matters: The Fed's next rate decision could swing on hundredths of a percentage point in core CPI, meaning a single decimal determines whether borrowing costs rise or hold heading into the November midterms — even as energy-driven inflation spreads into shipping and travel costs and Trump's proposed $5,000 payments risk adding further pressure.
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