Fed to stick with aggressive rate hikes, next week and beyond

The consumer price index climbed 0.1% last month from July, and gained 8.3% from the year-earlier period, the Labor Department reported.

If the Fed announces a 75-basis-point hike at the end of its Sept. 20-21 meeting, its targeted policy rate would rise to the 3.00%-3.25% range, above the level that most policymakers believe will start biting into economic growth and pushing up unemployment. As recently as June, when Fed policymakers last published their own policy path expectations, only one - Minneapolis Fed President Neel Kashkari - saw rates that high at the end of next year.

Prices of new cars and household furnishings gained, as did prices of food, while core prices - which exclude volatile food and energy components - jumped 0.6% in August from July, twice what analysts polled by Reuters had expected. That put the yearly gain in core prices - a key measure of how persistent inflation could be - at 6.3%, a jump from 5.9% in July.

Their rate increases are now going to become counterproductive. Businesses will have to adjust prices for borrowing costs, negating their impact.

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