Fed Keeps Rates Steady Amid High Inflation and Energy Prices

The Federal Reserve's rate-setting committee made no changes to interest rates on Wednesday, despite persistently high inflation and rising energy prices. The decision marked the fifth consecutive meeting where the benchmark rate was kept at around 3.6%. Three Fed officials - Beth Hammack, Neel Kashkari, and Lorie Logan - voted in favor of a quarter-point hike.

Fed Chair Kevin Warsh said he had asked for a 'good family fight' and got one, referring to the dissenting votes. Inflation has been above the central bank's 2% target since early 2021, with a peak of just over 9% in mid-2022. The Iran war has driven up energy prices and intensified inflationary pressure.

The market saw a 33% chance of a rate hike on Wednesday, but most expected policymakers to hold off. A majority - 76% - foresee a rate hike in September, up from 59% last month.