By Geoffrey Smith
Investing.com — U.S. inflation turned out stronger than expected yet again in August, paving the way for another big hike in interest rates from the Federal Reserve when its policy-makers meet next week.
The rose 0.1% in August, and was up 8.3% from a earlier, the Bureau of Economic Analysis said on Tuesday. Analysts had expected prices to fall by 0.1% thanks to the steady decline in gasoline prices from their summer peak.
However, that factor was overwhelmed by big increases in the less volatile elements of consumer spending. The so-called ” rose a thumping 0.6%, twice what was expected, driving the up to 6.3% from 5.9% in July. That’s the highest it’s been since March.
The instantly gained more than a cent against the on the news, as market participants moved to price in another rate hike of 75 basis points from next week’s Fed meeting. The same calculation sent stock futures into reverse, leaving down 1.3%, down 1.8%, and down 2.5%. All three had posted solid gains on Monday and had been on course to extend those gains before the release.
