Mounting inflation pressures put more Fed rate hikes in view
Mounting inflation pressures and a strengthening economy look to be pushing the Federal Reserve towards an interest-rate hike on the eve of critical national elections, with traders on Wednesday piling into bets on a second straight Fed rate increase in late October. A closely watched measure of U.S. business activity, S&P Global's flash U.S. Composite PMI Output Index, jumped this month to its…
Inflationary pressures and a robust economy are reportedly pushing the Federal Reserve towards increasing interest rates ahead of significant national elections, according to traders. The anticipation of a second consecutive Fed rate hike in late October has gained traction on Wednesday. S&P Global's latest U.S. Composite PMI Output Index, a key indicator of business activity, surged to its highest point since July 2021, indicating a tightening economy.
The survey also revealed that businesses are paying more for their inputs, with prices hitting a nearly four-year high. The surge in oil prices, with Brent crude futures rising by nearly 2% to $101.09 per barrel, is further exacerbating inflation concerns. Diesel fuel prices have also surged, reaching over $6.50 per gallon, due to the ongoing US-Iran conflict disrupting supply chains.
This surge in diesel prices could potentially amplify inflationary pressures across the economy. Fed Governor Michael Barr echoed similar sentiments, suggesting that the Fed is likely to implement additional rate hikes due to the mounting inflation risks and strong economy.
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