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Inflation Surprise Puts Onus on Fed to Hit Brakes Even Harder

  • Consumer price report illustrates demand powering inflation
  • Fed seen acting more aggressively to stamp out price pressures
Bloomberg business news
WATCH: US inflation runs hot in August. Source: Bloomberg
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The US economy has shown surprising resilience in the face of the fastest inflation and interest-rate hikes in a generation. That means the Federal Reserve will have to stomp even harder on demand.

What started as a pandemic-driven supply shock has morphed into widespread inflation rooted just as much in resilient demand, underscored by unexpectedly high numbers that dashed hopes price gains were ebbing. While consumers are showing some signs of slowing, they’re still largely keeping up with persistent price pressures, powered by historic wage gains.