Wall Street Bets on Rate Hike From a Fed Hemmed In by Persistent Inflation
The Federal Reserve is expected to hike interest rates following persistent inflation data, despite political pressure from the Trump administration. Rising bond yields and mortgage rates over 7% reflect a challenging economic environment for the US.
Why it matters
The tension between the Fed's independent monetary policy and executive political pressure highlights ongoing economic instability.
Someone tell the president not to check the news this week.
The Federal Open Market Committee will convene tomorrow and announce Wednesday whether it plans to cut, hike or hold the federal funds rate steady, and all signs point to a hike. The last key piece of economic data the Fed saw was Friday’s Consumer Price Index update, which showed that inflation kept up its elevated pace in August with a 3.4% increase from a year ago. “Core” inflation, which excludes volatile food and energy prices and is closely watched by the central bank, rose 2.4%.
While the data was in line with expectations, it shows that inflation is still much too hot for the Fed’s liking. The odds of a rate hike jumped to about 87% after the report Friday morning.
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