Fed Holds Fire on Rate Hike as Inflation Frustration Grows

The Federal Reserve is expected to keep its benchmark interest rate unchanged this week, despite growing frustration over high inflation. In his semiannual monetary policy report to Congress, Federal Reserve Chairman Kevin Warsh stated that he has 'no tolerance' for elevated inflation.

However, some analysts believe that the Fed may hold off on a rate hike until their next meeting in September. According to Joseph Egelhof and Guneet Dhingra at BNP Paribas Securities, it's possible that policymakers will 'release the kraken' with a shock rate hike this week, but more likely they will hold off.

Wall Street traders are divided on whether a rate hike is imminent. Only 29% predict that the Fed will raise rates this week, while 76% foresee a rate hike in September. The uncertainty surrounding the Iran conflict and its impact on oil prices adds to the complexity of the situation.