Oil shock tests inflation as Fed weighs next move

Friday’s inflation report is pivotal as renewed Middle East conflict pushes energy costs higher. Economists expect headline inflation to ease to about 3.3% year over year, with core inflation around 0.2% month over month, but surging oil and gas prices could lift overall prices again. The Federal Reserve remains split on a rate hike next week, while longer‑term yields rose on inflation fears, underscoring heightened borrowing costs amid a sensitive economic and political backdrop ahead of the midterms.