Inflation surge nudges the Fed toward rate hikes before the midterms

U.S. inflation, per the Fed's preferred PCE gauge, rose about 4.1% year over year (core PCE at its fastest pace in almost three years), fueling bets that the Fed will raise interest rates and even possibly as soon as September with Kevin Warsh, President Trump's pick for Fed chair. Markets priced in roughly a 64% likelihood of a hike before year-end, a path that could tighten financial conditions ahead of the midterm elections amid geopolitically driven energy-price shifts and ongoing debates over monetary policy.