Federal Reserve officials have hinted that they are prepared to raise interest rates if inflation doesn't improve soon. However, they may find that in the face of some of the factors currently driving up prices, it is probably difficult for their main policy tools to act as much of a deterrent. The consumer price index report to be released on Friday may determine whether policymakers will raise interest rates next week. Officials emphasized that they need to see more reassuring signs that underlying inflation is moving towards the Federal Reserve's 2% target. According to futures contracts, investors currently expect the probability that the Federal Reserve will raise interest rates at the September 15-16 meeting is about 60%. Stephanie Roth, chief economist at Wolfe Research, said, “The key factors driving inflation above trend levels are Iran's war, tariffs, and chip shortages. Even if the Federal Reserve raises interest rates once or twice, it is unlikely to fundamentally change this background.”

Federal Reserve officials have hinted that they are prepared to raise interest rates if inflation doesn't improve soon. However, they may find that in the face of some of the factors currently driving up prices, it is probably difficult for their main policy tools to act as much of a deterrent. The consumer price index report to be released on Friday may determine whether policymakers will raise interest rates next week. Officials emphasized that they need to see more reassuring signs that underlying inflation is moving towards the Federal Reserve's 2% target. According to futures contracts, investors currently expect the probability that the Federal Reserve will raise interest rates at the September 15-16 meeting is about 60%. Stephanie Roth, chief economist at Wolfe Research, said, “The key factors driving inflation above trend levels are Iran's war, tariffs, and chip shortages. Even if the Federal Reserve raises interest rates once or twice, it is unlikely to fundamentally change this background.”