Inflation rose 2.9% in August, complicating expectations for a Federal Reserve rate cut just days before its upcoming policy meeting.
Higher prices risk limiting Fed flexibility, as easing borrowing costs could further fuel inflation while tighter policy may slow the economy.
Despite inflation concerns, weak hiring has markets betting 90% odds on a quarter-point cut and 10% on a half-point reduction.
Policymakers face balancing growth risks against inflation pressures, making September’s decision a pivotal test for the Fed’s rate strategy.
