Wall St gains as mixed CPI data fuels rate-pause hopes

Wall Street’s main indexes rose on Wednesday as data showing a moderate increase in consumer prices in August raised hopes the Federal Reserve could leave interest rates unchanged in its September policy meet.

Consumer price inflation rose in line with expectations on a monthly basis by 0.6% in August, compared with a 0.2% rise in July, but core inflation rose by a more-than-expected 0.3% last month.

On a yearly basis, the headline inflation rose marginally higher than expected at 3.7% in August compared with a 3.2% increase in July.

Gasoline prices accelerated in August, peaking at $3.984 per gallon in the third week of the month, according to data from the U.S. Energy Information Administration. That compared to $3.676 per gallon during the same period in July.

“Inflation is already contained so these monthly numbers are more noise than substantive,” said Jay Hatfield, chief executive officer at Infrastructure Capital Management.

“It is really a reflection of the fact that there is a bleed through of energy prices to core and our models show the energy prices are likely to stay range bound, so we do think that inflation’s contained.”

Traders see a 97% chance of the Fed holding rates in September and a near 58% likelihood of a pause in November, according to the CME FedWatch Tool.

This report’s information was first seen on REUTERS; to read more, click this link.