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Updated on: September 10, 2026 / 4:12 PM EDT
/ CBS News
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A key inflation reading tomorrow could determine whether the Federal Reserve issues its first interest rate hike in more than three years.The August Consumer Price Index report, scheduled for release at 8:30 a.m. ET on Friday, is the last major inflation snapshot Fed officials will receive before announcing their next interest rate decision on Sept. 16. Economists expect prices last month rose 3.3% on an annual basis, reflecting an easing after reaching a three-year high of 4.2% in May.The August report could help Fed officials determine whether the recent easing reflects an ongoing trend, or whether inflation is becoming stubbornly entrenched amid high fuel prices caused by the Iran war. Its primary tool for taming inflation, one of its core mandates, is to raise borrowing costs, which helps cool spending.At the Fed's previous meeting, nearly half of its policymakers said they would support a rate hike later this year. If officials vote to raise their benchmark rate next week, it would mark the first increase since July 2023, when the central bank was battling the highest inflation in more than four decades."It's clear that the swing voters at the Fed are paying close attention to this inflation data," Heather Long, a chief economist at Navy Federal Credit Union, said of the CPI report."I think that's what's really giving it heightened meaning," she added. On Thursday, the Labor Department said the producer price index — which captures inflation before it reaches consumers — rose 5.4% in August from a year ago, up from 4.8% in July. U.S. oil prices topped $100 a barrel Thursday on renewed fighting in the Middle East, while President Trump has intensified a trade war with Canada, a sign tariffs still could push up costs.
