Will Next Week's Fed Meeting Bring New Variables? Markets Bet on October Rate Hike After PPI Data Release

Odaily reports that data shows the U.S. August PPI annual rate came in at 2.4%, higher than the market expectation of 5.3%, while the August core PPI monthly rate came in at 0.2%, below the market expectation of 0.3%, sending mixed signals as Fed officials debate whether to raise rates next week.

Following the PPI data release, the market has fully priced in a Fed rate hike in October. This PPI report was published one day before the latest CPI data is released, which is expected to show relatively mild so-called core inflation.

Some Fed officials have hinted that the rate decision at the September 15-16 meeting may depend on what this week's reports reveal. Fed Chair Warsh said in a speech last month that if policymakers cannot be confident that underlying inflation trends are improving significantly, the Fed "still has work to do." Amid ongoing hostilities between the U.S. and Iran, a renewed rise in oil prices could further complicate the outlook.