Fed Keeps Rates on Hold Amid Frustration with Inflation

The Federal Reserve is likely to keep interest rates unchanged at its upcoming meeting in Washington this week. This decision comes despite growing frustration over high inflation, which has been above the Fed's target of 2% for more than five years.

New Fed Chair Kevin Warsh has expressed his 'no tolerance' for elevated inflation and is presiding over his second policy meeting this week. However, some analysts believe that policymakers may not be ready to act on their frustration, at least not yet.

Fed watchers Joseph Egelhof and Guneet Dhingra from BNP Paribas Securities predict a 'shock rate hike' is possible, but more likely, policymakers will hold off due to concerns about disrupting financial markets. The Commerce Department's release of economic growth data on Thursday may also influence the Fed's decision.

Currently, only 29% of Wall Street traders expect a rate increase this week, while 76% foresee a hike in September. Several Fed policymakers have been arguing that the central bank needs to raise rates to return inflation to its target level.