US Fed rate hike bets rise after inflation edges up to 3.7%, higher than expectations

US PCE inflation rose to 3.7% year-on-year in July from 3.6% in June, above expectations, while core PCE held at 3.3%. Markets raised the probability of a September Fed rate hike to about 44%, up from 36% before the report, and traders are now fully pricing in a rate increase by year-end. Persistent above-target inflation reduces the chances of near-term US rate cuts, which is likely to pressure emerging market flows and the rupee, with knock-on effects for Indian equities.