Hot PPI data raises odds of another Fed rate hike

A hotter-than-expected producer price index report on Thursday has led Wall Street economists to forecast an acceleration in the Federal Reserve's preferred inflation gauge, raising the risk of another rate hike at the central bank's meeting later this month. The September PPI rose 1.3% monthly, more than double the consensus estimate and the largest gain since March 2022, pushing the year-over-year increase to 6.3%. Seven Wall Street estimates project core PCE inflation for September to rise 0.32%, up from 0.25% in August, which would boost the annual rate to 3.1%. Fed futures show a 29% probability of a hike at the end of October but a 91% chance by December. Officials have signaled no urgency, though inflation has remained above the 2% target since 2021, accelerating since tariffs were introduced in April 2025 and the start of the Iran war.