US Fed enters quiet period with rate increase on table

The US Federal Reserve entered a quiet period this weekend, with officials deliberating whether to raise interest rates to combat inflation. The two-week period of silence began on Saturday and will conclude on September 17, the day following the central bank's upcoming rate-setting meeting. Policymakers entered the pause uncertain if a rate increase is necessary to curb inflation or if they believe it's already under control.

This week's impressive labor report, revealing a surge of 162,000 jobs in August, indicated the US economy is performing better than anticipated. Separately, government data from the previous month showed the Fed's inflation remained stable at 3.7 percent. Nancy Houten, an economist at Oxford Economics, noted that while the August employment report exceeded expectations, it wasn't sufficient to prompt the Fed to alter its stance.

Currently, about 60 percent of traders anticipate the Fed will increase the federal funds rate by a quarter of a point, raising its target range to 3.75 percent to 4 percent. However, one Fed board member, Christopher Waller, suggested that a rate increase is not guaranteed if progress on inflation continues. The final major inflation data the Fed will receive before the September 15-16 meeting will be the Consumer Price Index report, which Wall Street economists predict will show a 0.4 percent monthly increase and a 2.4 percent year-over-year rise in inflation.

The September meeting follows the Fed's July decision to maintain rates steady for the fourth consecutive meeting. Three officials voted against the decision, favoring a rate hike. Minutes from that meeting revealed growing aggressive sentiment within the decision-making committee. President Donald Trump used recent labor data to push for lower interest rates, threatening tariffs against the central bank if it fails to reduce rates.