Fed Frustrated with Inflation, But Rate Hike Delayed

Federal Reserve policymakers are frustrated with inflation, but they may not be ready to raise interest rates yet. The central bank is expected to keep its benchmark rate unchanged this week, despite Chairman Kevin Warsh's comments that he has 'no tolerance' for elevated inflation.

New Fed Chair Warsh presided over his second policy meeting of the week on Tuesday and Wednesday. Inflation has been above the Fed's 2% target for more than five years, and policymakers may be reluctant to act now to avoid disrupting financial markets.

Fed watchers at BNP Paribas Securities believe a rate hike is possible this week, but more likely next month when the Fed meets again. Only 29% of Wall Street traders predict a rate increase this week, but 76% foresee one in September.