Fed Holds Off on Rate Hike Despite Frustration with Inflation

Despite growing frustration over high prices, Federal Reserve policymakers are expected to keep interest rates unchanged this week. The Fed's rate-setting committee may not be willing to act on inflation yet, but some members have expressed their impatience with elevated inflation levels.

New Fed Chair Kevin Warsh has stated that he has 'no tolerance' for inflation above the 2% target, which inflation has exceeded since early 2021. The current inflation rate is well above this target, peaking at just over 9% in mid-2022 before dropping in response to 11 rate hikes by the Fed.

Some economists believe that the Fed may wait for more economic data, particularly the Commerce Department's release of the first look at April-June economic growth and the personal consumption expenditures (PCE) price index for June, which could provide a clearer picture of inflation trends. Others predict a rate hike in September, with 76% of Wall Street traders foreseeing a rate increase.