Fed Expected to Hold Rates Steady Amid Inflation Concerns

Despite growing concerns about inflation, the US Federal Reserve is expected to keep interest rates steady on Wednesday. The decision comes as policy-makers are evenly split over whether to hike rates this year, with Chairman Kevin Warsh's no-guidance regime creating uncertainty around the outcome.

Warsh has expressed his 'no tolerance' for inflation that has been above the Fed's 2-per-cent target for more than five years. However, consumer price inflation slowed to 3.5% in June, from 4.2% in May, and oil prices have fallen sharply this week on renewed hopes of another ceasefire between the US and Iran.

Analysts expect at least one of the policy-makers to dissent if rates are left unchanged, with Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack indicating support for higher rates. Financial markets are pricing a one-in-three chance of a quarter-percentage-point rate hike.