Fed Expected to Hold Rates Steady Amid Inflation Concerns

The US Federal Reserve is expected to hold interest rates steady at its meeting on Wednesday, but policymakers are increasingly concerned about inflation.

Consumer inflation eased to 3.5% year-over-year last month, but is expected to rise again due to the recent escalation of tensions between the US and Iran, which has sent global energy prices soaring.

'This is a highly unusual meeting in the sense that we don't really know what the Fed chair's current thinking is,' said Gregory Daco, chief economist at EY-Parthenon. He noted that 'patience is running thin' among policymakers, who are ready to act if inflation does not soon move back towards 2%.

Fed Governor Christopher Waller has warned that the Fed needs to be prepared to tighten monetary policy to prevent a repeat of the 2021-2022 inflation episode. 'Sternly staring at inflation until it melts before our withering gaze is not an option,' he said.