The Labor Department reported that consumer prices rose 0.3% in August. The core Consumer Price Index (CPI) was flat.
These number suggest that inflation is subdued and does not pose an immediate threat to the economy. Now, analysts are speculating about Federal Reserve policies going forward.
The report on consumer prices follows a 0.4% rise in producer prices, after a 0.2% rise in July, as reported in the New York Times.
The Federal Reserve meets next week amid an economy that is sluggish, with many variables pointing lower. Home prices are still falling and unemployment is too high. We lost 27,000 manufacturing jobs last month. There are new layoffs among major companies announced this week.
Amid this backdrop, the Fed has a difficult choice to make. Will they return to quantitative easing? The best guess is that they will stay pat and wait to see if things deteriorate any further. This was the opinion of Bruce McCain of Key Private Bank.
The reaction in the markets is muted. The December U.S. dollar contract is up a tad.