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Wall Street prepares for August inflation reports and European Central Bank interest-rate decision

Investors are preparing for a week of significant economic data, beginning with the release of the Producer Price Index on Thursday. This wholesale inflation report provides details on prices for businesses before costs are passed to consumers. On Friday, the U.S. will release the Consumer Price Index for August, which tracks price changes for specific items like groceries, furniture, and clothing. These reports are expected to help the Federal Reserve determine the direction of inflation, which currently remains above 3%. The central bank's goal is to cool inflation to a rate of 2%. Rising energy prices caused by the U.S. war with Iran have contributed to inflation, while ongoing tariff conflicts also threaten to increase prices. Additionally, the European Central Bank will announce its latest interest-rate decision on Thursday. Markets are pricing in a 25-basis-point increase as policymakers assess the market effects of higher energy prices associated with the Middle East conflict. Meanwhile, the markets will also monitor developments involving Iran and the Strait of Hormuz, where a U.S. naval blockade of Iranian ports and tighter sanctions are restricting Tehran's oil exports.

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