What's happening: Investors see a growing probability that the Federal Reserve could hike interest rates by a full percentage point at its next meeting for the first time in the modern era. In June, the Fed raised interest rates by three-quarters of a percentage point, which it hadn't done since 1994.

US stocks mostly shrugged at the news on Wednesday that consumer prices jumped 9.1% year-over-year in June, a fresh 40-year high and a larger increase than forecast. But policymakers indicated deep concern.

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"Everything is in play," Atlanta Federal Reserve Bank President Raphael Bostic told reporters on Wednesday.

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Previously, Fed officials had expressed worries about the consequences of a hike of that magnitude.

"I think the markets would have a heart attack," Fed Governor Christopher Waller said last month.