Financial markets stuck to bets Friday that the U.S. central bank will continue to increase its policy rate, including by another 75 basis points at its next meeting, after a government report showed inflation continued to be red hot.
The personal consumption expenditures price index, which the Fed targets at 2%, rose 6.2% in August from a year earlier, the Commerce Department reported. Underlying inflation, as measured by a core reading that excludes food and energy prices, rose 4.9% from 4.7% previously.
After the report, futures contracts tied to the fed funds rate dropped slightly, as traders added to their bets the Fed will lift its policy rate, now targeted at 3%-3.25%, by another 1.25 percentage points by year's end and further next year.
(Reporting by Ann Saphir; Editing by Chizu Nomiyama)