Fed Faces Inflation Hawks as Rate Decision Looms

The US Federal Reserve is expected to keep interest rates steady on July 29, but there are growing concerns among some policymakers that inflation may be getting out of control. Despite consumer inflation easing to 3.5 percent year-on-year last month, bets on a rate hike have been rising due to the impact of President Donald Trump's war on Iran on oil prices.

The uncertainty around the outcome of the meeting is unusual, and is fueled by Chairman Kevin Warsh's refusal to publicly share his views on the economic outlook. This has led some analysts to speculate that there may be dissents among policymakers in favor of a rate hike.

'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. 'The hawkish core of the Fed has not only hardened but it's broadened.'

Diane Swonk, chief economist at KPMG, also expects dissents and predicts two rate hikes for later this year due to further price rises expected from Trump's war on Iran.