is mounting the central bank may raise the official U.S. interest rate by a full percentage point for the first time since the early 1990s, reflecting the growing unease among traders and policymakers about unrelenting inflation. Just a month ago, traders were almost fully pricing in 50 basis points.
The Fed wants to see inflation running at a target rate of 2% annually. The U.S. consumer price index report showed that in August prices were 8.3% higher than the year before, or about 6 percentage points“Today’s CPI report confirms that the U.S. has a serious inflation problem,” former Treasury Secretary Lawrence Summers. “If I had to choose between 100 basis points in September and 50 basis points, I would choose 100 basis points move to reinforce credibility.
“Markets capitulated on that reality, and we now are starting to understand that there is no `Fed pivot’ coming as traders were hopeful for in the short term,” Howard Greenberg, a cryptocurrency educator at Prosper Trading Academy, said.