Fed Holds Fire as Hawks Circle: Inflation Concerns Mount Ahead of Rate Decision
The US Federal Reserve is expected to hold interest rates steady on Wednesday, despite rising inflation concerns. The Fed's open market committee (FOMC) will announce its decision at 2:00 pm (1800 GMT), following two days of closed-door sessions.
Most investors expect the Fed to keep rates between 3.50 and 3.75 per cent for the fifth straight meeting, according to CME's FedWatch monitoring tool. However, some policymakers are pushing for a rate hike in response to surging inflation, which has been fueled by President Donald Trump's war on Iran.
Consumer inflation eased to 3.5 per cent year-on-year last month, but is expected to rise again due to seesawing oil prices from the conflict. The uncertainty around the outcome of the meeting is unusual, with Fed Chairman Kevin Warsh refusing to publicly share his views on the economic outlook.
Gregory Daco, chief economist at EY-Parthenon, noted that 'patience is running thin' among policymakers when it comes to inflation, which has remained above the Fed's long-term 2 per cent target for more than five years.