• The Consumer Price Index rose 3.7% year-over-year and 0.6% month-over-month in August, its largest
monthly increase this year, according to Wednesday’s release by the Bureau of Labor Statistics.
• Energy was responsible for much of the increase in headline inflation, rising 5.6% on the month, including
a 10.6% increase in gasoline offset by other key energy metrics.
• Core-CPI, which excludes food and energy prices from the calculation, rose 0.3% from July and 4.3%
year-over-year, hotter than many economists expected. Shelter continued to be a pivotal contributor to
core CPI, while prices for other core items, such as used vehicles and airfare, continued to decline.
• Just one week after the CPI release, FOMC officials are set to meet to conduct their newest policy
decision, where they are largely expected to hold rates steady.
• According to the Chicago Mercantile Exchange’s Fed Watch Tool, an overwhelming majority of futures
markets (97.0%) expect the FOMC to hold the benchmark Fed Funds rate unchanged at 5.25-5.50%.
• Despite a hotter-than-expected core-CPI inflation reading in August, officials prefer the Bureau of
Economic Analysis’ PCE core inflation, which, while currently hovering slightly above the CPI measure,
has shown a steadier decline over the past year.
• Fed policymakers have recently positioned themselves with a more balanced outlook on inflation, viewing
underlying price pressures as fading but cautious about taking their foot off of the break too prematurely.
Presently, futures markets do not predict a rate cut from current levels until June 2024.

Read the full report here.