Fed Hike Odds Hit 70% as PPI, $100 Oil Stoke Inflation — SkimNews

Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Market pricing pushed Fed rate hike odds for next week's meeting to 70% — with December hike chances near 60% — after August PPI came in elevated and U.S. crude crossed the $100/barrel barrier
- August PPI rose 0.4% (matching forecasts) following an upwardly revised 0.1% July gain, pushing the annual PPI rate to 5.4%, slightly above expectations
- U.S. crude oil jumped 4% to just over $100 a barrel as intensified Iran-related Middle East hostilities spooked commodities traders
- The European Central Bank announced a quarter-point rate hike and raised its inflation forecast, citing deeper economic impacts from the Iran war
- Bank of America economist Stephen Juneau estimated core PCE tracking at 0.26–0.3% monthly, saying it would greenlight a Fed hike; BofA expects three hikes total, well above consensus
- Fed Chairman Kevin Warsh reiterated that the PCE price index is the central bank's official inflation yardstick, with July core PCE at 3.3% and headline at 3.7%
- Peter Boockvar of OnePoint BFG warned that even a soft CPI could indicate companies are absorbing rather than passing through higher costs, calling PPI evidence of supply-chain inflation pressure
Why it matters: Hike odds surged to 70% on PPI at 5.4% annual and oil clearing $100, with Friday's CPI as the final swing factor. Bank of America's three-hike outlook sits well above consensus, meaning even if next week goes as priced, a hawkish path through December could pressure stocks, housing, and consumer borrowing costs materially higher.
Ask SkimNews


