Annual core inflation slowed to 2.4%, and a quarter-point increase on Sept. 16 would be the first Federal Reserve rate hike since July 2023.
The Consumer Price Index rose 0.4% in August, quadrupling July's 0.1% increase as consumer prices held at a 3.4% annual rate — above the 3.3% forecasters had projected the day before. Core inflation, which excludes volatile food and energy costs, rose 0.3% on the month while slowing to 2.4% over the past year. Following the data release, interest-rate futures priced in a greater than 80% chance of a quarter-point rate increase at the Federal Reserve's Sept. 16 meeting.
What next. The Federal Open Market Committee convenes for its two-day policy meeting on Sept. 15, with a formal interest-rate decision scheduled for Wednesday, Sept. 16. Nearly half of Fed policymakers had already signaled support for raising rates again.
What a quarter-point hike would cost a household
- The benchmark federal funds target range moves to 3.75%–4.00% — and credit-card and home-equity rates, which track it directly, follow within weeks.
- If lenders pass the full increase through, a new $400,000 30-year mortgage costs about $65 more a month — roughly $24,000 more over the life of the loan.
- Inflation-adjusted hourly earnings already fell 0.3% over the year, extending real wage declines to five straight months.