Fed Holds Rates Steady Amid Inflation and Iran Tensions

The Federal Reserve has kept its key interest rate unchanged at around 3.6% despite persistently high inflation and a spike in energy prices caused by the Iran war.

Fed Chair Kevin Warsh told reporters that he had asked for 'a good family fight' and got one, referring to the 9-3 decision made by the Fed's rate-setting committee after two days of deliberations.

The inflation rate has been stuck above the central bank's 2% target for more than five years, with a peak of just over 9% in mid-2022. The Fed had raised rates 11 times between 2022 and 2023 to combat high prices, but progress has stalled.

Inflationary pressure is also being driven by factors such as President Donald Trump's tariffs on foreign goods and a surge of investment in data centers to power artificial intelligence, which is driving up the cost of computer chips and equipment and electricity.