Fed Holds Fire on Interest Rates as Inflation Frustration Mounts

The Federal Reserve is expected to keep its benchmark interest rate unchanged this week in Washington. Despite growing frustration with inflation, policymakers may hold off on taking action, at least for now.

Inflation has been above the Fed's two percent target for over five years, and new Chair Kevin Warsh has expressed 'no tolerance' for elevated prices. However, economists Joseph Egelhof and Guneet Dhingra from BNP Paribas Securities suggest that a rate hike is more likely in September than this week.

The Fed's decision-making is also being influenced by the ongoing conflict between the US and Iran, which has sent oil prices surging. Economists are warning that the uncertainty surrounding the situation could make it difficult for the Fed to set monetary policy effectively.