Fed Expected to Hike Rates Next Week as Inflation Remains Hot at 3.4%

The Federal Reserve is now seen as extremely likely to raise its benchmark interest rate next week, after a key inflation reading came in hot on Friday.Investors have increasingly been eyeing a rate increase, and the probability of September rate hike surged above 90% following the latest Consumer Price Index (CPI) data release from the Labor Department, according to CME FedWatch.The report showed prices rose 3.4% annually in August, unchanged from the prior month. But prices jumped 0.4% from June, a major surge from the last monthly increase of 0.1%.The new CPI report is the final major economic indicator before the Federal Open Market Committee (FOMC) holds its two-day policy meeting next week, with a vote on interest rates to be held on Wednesday.The Fed's overnight rate has held steady at a top range of 3.75% since December. An increase to 4% would mark the first rate hike in three years, with broad implications for the housing market.Although the Fed operates under a dual mandate of price stability and maximum employment, Fed Chairman Kevin Warsh and the FOMC have been focused squarely on inflation recently, not labor.Prediction marketplace Kalshi estimates a more conservative...