US Inflation Surges to 2.9% Ahead of Crucial Interest Rate Decision

US Inflation Rises Ahead of Key Interest Rate Decision The US inflation rate rose to its fastest pace since the beginning of the year in August, increasing 2.9 percent from 2.7 percent in the previous month, according to figures released by the US Labor Department. The uptick in inflation comes ahead of a key Federal Reserve meeting next week, where policymakers will decide whether to cut or hold interest rates. The consumer price index (CPI) rose due to increases in the cost of cars, household furnishings, and grocery staples such as tomatoes and beef. The data is unlikely to derail forecasts that the Fed will cut interest rates by a quarter of a percentage point next week, but it may keep policymakers cautious as they weigh rate cuts in the months ahead. President Donald Trump's inflationary policies - tariffs and restrictive immigration measures - have been criticized for contributing to rising prices. "The President's policies are clearly having an impact on consumer prices," said Mark Zandi, chief economist at Moody's Analytics. "We're seeing a rise in import costs due to tariffs, which is being passed on to consumers." However, some economists argue that the inflation rate remains under control and that a rate cut would be premature. "The data suggests that inflation is still within the Fed's target range," said David Kelly, chief global strategist at J.P. Morgan Asset Management. "A rate cut would be a response to a non-existent problem." The Federal Reserve has kept interest rates unchanged since last year as policymakers continued to monitor the effect of Trump's import tariffs on consumer prices. The President and some of his allies have attacked the Fed for not cutting rates at the same pace as other central banks in, for example, the UK and Europe. Next week's meeting will be closely watched by investors and economists, who expect the Fed to cut interest rates to boost economic growth. However, the new data may give policymakers pause as they weigh the potential impact of a rate cut on inflation. In related news, the US Treasury Department announced that it would issue $20 billion in 10-year notes next week, which could provide further insight into market sentiment ahead of the Fed's decision. The Federal Reserve's interest rate decision is set for September 18. *Reporting by Bbc.*