Key takeaways
- Headline inflation rose by 0.6% for August, the biggest monthly increase in over a year
- But core inflation has decelerated to 4.3%, the lowest result since September 2021
- The results didn’t dissuade investors from the view that the Fed will hold interest rates steady at the next meeting
The latest inflation data was released yesterday, with headline inflation showing the biggest increase since June last year. The inflation rise was explainable, allaying concerns from investors that the inflation battle is turning into a war, but the Fed may not be so charitable with its own view.
The market reaction was one of continued optimism, with the stock market and dollar rising. A short-term positive reaction may be warranted, but the inflation data was a mixed bag and points to some long-term issues the Fed may face in bringing inflation in line.
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