US inflation data released in August strengthened expectations that Federal Reserve policy could remain restrictive. July PCE inflation exceeded expectations, lifting the market-implied probability of a September rate hike to about 42% from 36%, while separate second-quarter 2025 PCE data showed prices rising 5.3% quarter over quarter, above the 5.1% forecast and up from 4.8% in the first quarter. The newer reading reduced the probability of a September rate cut from 70% to around 55%, according to CME FedWatch. The records report different PCE measures and therefore should not be treated as the same inflation figure: the July data showed monthly and annual changes, while the second-quarter release reported quarter-over-quarter changes. Both indicated persistent price pressure and complicated the Federal Reserve's policy path.