The U.S. inflation for August posted the largest monthly increase this year as Americans faced higher energy prices that was also a driving force for other items.
The consumer price index rose 3.7% in August from a year ago, which was slightly higher than a 3.6% rise surveyed by Dow Jones. Meanwhile, a seasonally adjusted inflation rose 0.6% for the month, in line with the forecast.
However, core inflation, which excludes volatile food and energy prices, rose 0.3% MoM and 4.3% YoY, compared to a 0.2% MoM and 4.3% expected.
According to CME FedWatch Tool, the market is now giving a probability of 97% that the Fed will not raise interest rates in the meeting on September 20, which increased from a 92% chance a day prior. The Federal Reserve officials normally focus more on core inflation as it is a better indication for where inflation is heading in a long term.
The meeting in November, which would be one of the last two of this year, now has 57.8% odds for the central bank to hold rates, which is a slight increase from 55.8% yesterday, and the chance for a 25bps hike is 41%.
