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Wall Street will also get an update Wednesday on U.S. retail
sales for August. That could provide more insight into how and
where people are spending money amid higher inflation and slower
wage growth.
Inflation has been hanging over the central bank's interest rate
policy throughout the year. The rate of inflation has held
stubbornly above 3%, fueled by the U.S. war with Iran and its
impact on the world's oil supply. The war has essentially shut
down the Strait of Hormuz, where a fifth of the world's oil was
shipped prior to the start of the conflict in February.
Higher oil prices jolted the price of gasoline, hitting
household budgets both directly at the pump and indirectly by
making shipping more expensive.
The Fed has been holding its benchmark interest rate steady
while it monitors inflation, which is well above its target rate
of 2%. Wall Street has been betting there will be at least one
rate hike by the end of the year. Higher rates would make
borrowing more difficult and slow economic growth, which could
cool inflation.
The Fed has been facing pressure, though, from President Donald
Trump. He wants the central bank to lower interest rates
instead. That could give the economy a boost, but it could also
worsen inflation.
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