Fed Holds Rates Steady Amid Inflation Concerns and Iranian Tensions

The US Federal Reserve is set to hold its second meeting under new Chairman Kevin Warsh, starting on Tuesday. Markets expect policymakers to keep interest rates steady amid inflation concerns that could be exacerbated by President Donald Trump's renewed war on Iran.

Warsh was chosen to lead the Fed by Trump, who has made his demand for lower interest rates clear as he has exerted unprecedented pressure on the independent monetary policy-making body. The Fed's open market committee will announce its decision on Wednesday at 2:00 pm (1800 GMT), followed by a press conference by Warsh.

Most investors expect the Fed to hold rates steady at 3.50-3.75 percent for the fifth straight meeting, according to CME's FedWatch monitoring tool. US consumer inflation eased to 3.5 percent year-on-year last month, but remains far higher than the Fed's long-term two-percent target.

The fighting in Iran has sent energy prices soaring once more, with the benchmark oil futures contract breaching $100 per barrel for the first time since late May. At the Fed, policymakers have been losing patience with persistent inflation, indicating that a rate hike may be near.