Sticky US Inflation Keeps FOMC in Focus Ahead of Sept. 16 Meeting as Markets Watch Warsh

US inflation has remained stickier than expected, putting the market’s focus on the Federal Open Market Committee meeting scheduled for Sept. 16. Even as Treasury yields rise, New York stocks have stayed relatively resilient, making the outlook for monetary policy a key driver for risk assets.

US equities have recently held up despite pressure from higher rates, supported by corporate earnings and increased investment tied to artificial intelligence. Demand has remained concentrated in technology shares, offsetting some of the impact from rising bond yields.

The biggest question ahead of this FOMC meeting is what message Federal Reserve Chair Kevin Warsh will deliver. Warsh recently stressed the importance of price stability at the Jackson Hole meeting and struck a more hawkish tone than markets had expected. Attention is now on whether he will maintain that inflation-first stance at this meeting.

Inflation data are also adding to the Fed’s dilemma. According to the US Bureau of Labor Statistics, the consumer price index rose 3.4% in August from a year earlier. That matched market forecasts, but still left a sizable gap from the Fed’s 2% inflation target.

Underlying price pressures were stronger than expected. Core CPI, which excludes food and energy, rose 0.3% from the previous month, above the 0.1% expected by the market. The reading signaled that disinflation is not progressing quickly enough, reinforcing the view that the Fed will have difficulty shifting to a more accommodative policy stance in the near term.

Separately, concerns on Wall Street about the risks tied to the rapid development of AI are resurfacing. Repeated warnings that AI could move beyond human control are also drawing attention to the possibility that regulatory debate could intensify.