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Your Evening Briefing: Full-Point Rate Hike In Play as Inflation Rises

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Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta, said on Wednesday that Fed officials could consider raising interest rates by a full percentage point when they meet later this month. His comment was in response to higher-than-expected inflation in June.

Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta, said on Wednesday that Fed officials could consider raising interest rates by a full percentage point when they meet later this month. His comment was in response to higher-than-expected inflation in June.

Photographer: Valerie Plesch/Bloomberg

US inflation hit a four-decade high last month, likely strengthening the Federal Reserve’s resolve to aggressively raise interest rates. The consumer price index rose 9.1% from a year earlier. The widely followed inflation gauge increased 1.3% from a month earlier. “Rather than cooling down, inflation is heating up,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note. “While a pullback in gasoline costs in July and reported retail discounting will help tamp down the flames, the broad pressure in the core rate, led by plenty of inertia in rents, suggests inflation may not peak for a while.” Americans are furious over high prices and critics blame the Fed for its initial slow response. One Fed official conceded on Wednesday that the central bank may even consider a one percentage-point rate hike when officials meet this month. It would be the largest increase since the Fed started directly using overnight interest rates to conduct monetary policy in the early 1990s. According to Atlanta Fed President Raphael Bostic, “everything is in play.”

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