Traders have ramped up their expectations for a Federal Reserve rate hike next week after US inflation held steady at 3.4% in August, with elevated fuel costs continuing to ripple through the economy.

Data from the Bureau of Labor Statistics released Friday showed the annual consumer price index matching July’s figure, in line with projections from economists surveyed by Bloomberg. The core reading, which strips out volatile food and energy categories, eased slightly to 2.4% from 2.5% in the prior month.

The latest inflation snapshot lands as escalating conflict in the Middle East pushes international crude prices sharply higher. Brent crude this week topped $100 per barrel for the first time since July, fueling a broad global bond selloff that has driven long-term US borrowing costs to multi-year highs.

The persistent climb in fuel prices remains the dominant force behind August inflation, with gasoline alone accounting for roughly a third of the 0.4% monthly rise in the CPI. Kurt Lewis of Piper Sandler noted that the report provides the additional negative data point that investors have been looking for to solidify the case for a move. Lewis said the prevailing market mindset had been that just one more unfavorable print would tip the scales toward tightening, and this CPI report fits that criterion.

All eyes now turn to next Tuesday and Wednesday, when the Fed’s policymaking committee convenes for its much-anticipated meeting to finalize its rate decision. At the prior gathering in July, three of the twelve voting members of the Federal Open Market Committee dissented in favor of a quarter-point increase, while the majority chose to hold the target range steady at 3.5%–3.75%.

Following Friday’s CPI release, traders moved quickly to price in a higher probability of action at the September meeting. Market-implied odds jumped from roughly 70% before the data drop to more than 80% shortly after.

The yield on the policy-sensitive two-year Treasury note climbed seven basis points to 4.62%, while the 10-year yield at 4.94% remains within striking distance of three-year highs. Rate hike expectations had already firmed ahead of this report, after Fed Chair Kevin Warsh struck a hawkish tone at the Jackson Hole symposium, signaling that the central bank still “has work to do” if inflation is not brought down quickly.

On the Fed’s preferred inflation gauge, the personal consumption expenditures price index, the latest July reading stood at 3.7%—the fifth consecutive year that it has run above the 2% policy target. Jefferies economist Tom Simmons pointed to elevated consumer spending on travel as supporting evidence in favor of a hike, though he also observed that the sharp fuel price surge has yet to spill over into food costs.