0854 ET - U.S. consumer price inflation data--with both year-on-year headline and core inflation in line with expectations--have done nothing to change Schroders' view that the Federal Reserve is behind the curve, David Rees, head of global economics says. "While headline inflation is being pushed around by rising energy prices, the bigger picture is that the economy is running hot and domestically generated inflation is grinding higher," he says. Rees expects the market to continue questioning the Fed's credibility until it starts raising interest rates, and the Treasury's willingness or ability to cap yields. "The Fed can either choose a rate hike next week and a controlled rise in short term U.S. borrowing costs, or do nothing and risk an uncontrolled rise in long-term U.S. borrowing costs."