August CPI data could tip the Fed toward its first rate hike in three years

The Federal Reserve will receive its final major inflation snapshot before the September 16 policy meeting when the August Consumer Price Index is released at 8:30 a.m. ET on Friday. Forecasts point to a 3.3% annual increase, modestly lower than July's 3.4%, suggesting a possible easing trend. Officials will weigh this against persistent price pressures from elevated oil prices, tariffs and other supply-side shocks.

Fed Governor Christopher Waller has indicated he could support a hike if the CPI remains high, whereas Chairman Kevin Warsh has warned that more work may be needed if inflation does not move quickly toward the 2% target. Market pricing on the CME FedWatch tool currently assigns about a 70% probability that the benchmark rate will be lifted to the 3.75-4% range. Analysts expect the report to reinforce the case for a rate increase, though core CPI trends will also be scrutinized.