In her speech earlier this week, Chair Janet Yellen stressed that, despite the weakness of core inflation this year, the Fed still intends to push ahead with further interest rate hikes, with most officials expecting to raise rates before the end of this year. The Fed’s key decision makers, including Yellen, appeared to be wavering about whether or not that weakness was really due to idiosyncratic shifts in prices or the beginning of a more ominous disinflationary trend that they hadn’t anticipated. However, the stronger gain in core prices in August seems to have eased those concerns and officials have sounded more hawkish in the past couple of weeks.
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