Fed Holds Fire Amid Inflation Fears and Soaring Energy Prices

The US Federal Reserve is set to hold its second meeting under new chairman Kevin Warsh starting July 28, with markets expecting policymakers to keep interest rates steady amid inflation concerns.

Warsh was chosen to lead the Fed by President Donald Trump, who has made his demand for lower interest rates clear. Markets expect the Federal Open Market Committee (FOMC) to hold rates steady at 3.5% to 3.75% for the fifth straight meeting, according to CME's FedWatch monitoring tool.

The inflation rate eased to 3.5% year-on-year in June, but remains far higher than the Fed's long-term 2% target. Energy prices have soared due to hostilities between the US and Iran, with the benchmark oil futures contract breaching $100 per barrel for the first time since late May.

Fed policymakers have been losing patience with persistent inflation, indicating that a rate hike may be near. However, analysts say they do not expect a rate hike at this meeting due to headline inflation dipping in June and further rises expected ahead.