US inflation held steady at 3.7 percent in July, according to the Personal Consumption Expenditures Price Index, keeping price growth well above the Federal Reserve’s 2 percent target for the 65th consecutive month.
On a monthly basis, prices rose 0.2 percent, above expectations of 0.1 percent, reinforcing concerns that inflation is proving stickier than policymakers had hoped.
Energy costs have been a primary driver, with gasoline rebounding to around $4.10 a gallon, while the escalating US-Canada tariff dispute could add further pressure.
The data lifted expectations for a Federal Reserve interest-rate increase, with futures pricing in roughly a 42 percent chance of a hike at the September meeting.
For Gulf economies whose currencies are pegged to the dollar, the prospect of higher American rates carries direct implications for local monetary conditions.
