Updated

August consumer price data showed inflation running hotter than hoped, with the all-items CPI rising 0.4% and core CPI, excluding food and energy, up 0.2%, in line with a Dow Jones consensus but reinforcing concerns that price pressures remain sticky. Economists attributed much of the increase to persistent housing and services costs, intensifying pressure on the Federal Reserve and testing the credibility of officials such as Kevin Warsh who have downplayed inflation risks. Economists are now warning the Fed could move to raise rates as many as three times, noting that historically the central bank has rarely stopped after a single hike once it begins tightening. Markets are bracing for the possibility that a more aggressive rate path could become the stiffest test yet for equities and bonds already unsettled by sticky inflation data.