TYBS - Will Inflation's Upside Surprise Spoil The Fed's Rate-Cutting Party?

Just when it looked like inflation's threat was fading, Thursday's August report on consumer prices dispensed a not-so-fast alert. The core reading of the Consumer Price Index ((CPI)), which excludes food and energy, rose 0.3% last month and accelerated to a 2.4% annual pace - the highest in 11 years. One data point isn't a trend, of course. But Thursday's release is conspicuous at a time when the US economy is struggling with slow growth and expectations that interest rates are headed lower, perhaps turning negative at some point.

Core CPI has a history of

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