Gasoline Lifts US CPI 0.4% in August; Fed Rate Hike Likely — SkimNews
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- U.S. consumer prices likely rose 0.4% in August after edging up 0.1% in July, driven by gasoline averaging $4.192 a gallon (up from $4.064), with year-over-year inflation forecast at 3.4%
- Core CPI (excluding food and energy) likely rose 0.2%, putting year-over-year core inflation at 2.4% — still above the Fed's 2% target
- Financial markets priced in roughly a 70% chance of a 25-basis-point rate hike at the Fed's September 15-16 meeting, with the benchmark overnight rate currently in a 3.50%-3.75% range
- President Trump pressured the Fed to cut rates via social media, posting "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," which economists blamed for surging long-term Treasury yields
- Joe Brusuelas, RSM's chief economist, said the "war-induced energy shock is now in its seventh month with no end in sight" and that tariffs — most recently on Canada — are proving more persistent than a "one-time pass-through"
- Fed Chairman Kevin Warsh said the central bank will "have work to do" if policymakers don't gain confidence that inflation is heading to 2%
- Trump's approval ratings have suffered "a sharp erosion" from frustration over higher gasoline and food prices, with Republicans facing potential midterm losses in November
Why it matters: Economists see a direct Fed independence test on September 16, with markets pricing a 70% chance of a rate hike while Trump publicly demands cuts. Gasoline at $4.19 a gallon, oil above $100 a barrel, and core CPI at 2.4% keep the inflation fight alive, per Brean Capital's John Ryding.
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