RALEIGH — Will they or won’t they raise interest rates? Datapoints released today only “increase uncertainty” about the Fed’s plans for interest rates, says N.C. State economist Dr. Michael Walden.

Walden thinks the Federal Reserve System, or “Fed,” will keep us guessing until they meet next on Sept. 19-20.

Numbers released today include the Personal Consumption Expenditures Index (different from the Consumer Price Index), which showed that American spending in July rose 0.8%. That’s much higher than the 0.5% gain seen from May to June.

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“Consumer spending increased at its fastest clip since the Spring, and the Fed’s preferred inflation rose at an annual rate of over 3.5%, much higher than the Fed’s target rate of 2%,” said Walden.

Walden says that this new data, combined with Federal Reserve Chair Jerome Powell’s recent comments about the Fed’s commitment to a 2% inflation rate goal, makes it difficult to predict what the Fed will do next.

“All eyes are now focused on the next Fed meeting in mid-September,” said Walden. “Will they or won’t they raise interest rates?”

Walden also says that the latest Consumer Price Index numbers, which will be released a week before the Fed meets, will play a key role in the Fed’s decision.

“If those numbers are also disappointing, then I think we could see another move higher with rates,” said Walden. “The Fed will keep up waiting and watching!”

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