Fed Holds Fire on Rate Hike as Inflation Looms and Oil Prices Rise

The Federal Reserve is expected to keep its benchmark interest rate unchanged at its upcoming meeting in Washington, despite rising frustration over inflation that has been above the Fed's 2% target for more than five years.

New Fed Chair Kevin Warsh has stated he has 'no tolerance' for elevated inflation, but policymakers may hold off on a rate hike this week to avoid disrupting financial markets. Economists at BNP Paribas Securities predict that the Fed will 'release the kraken' with a 'shock rate hike' in September, when 76% of Wall Street traders foresee a rate increase.

The uncertainty surrounding the Iran war is casting doubt over the Fed's decision-making, as oil prices briefly surged past $100 a barrel last week. The disruption in oil supplies has been a significant concern for inflation fighters, with some economists arguing that the Fed should act to minimize the probabilities of inflation exceeding its target.