Fed Keeps Rates Steady Amid Inflation Worries

The Federal Open Markets Committee (FOMC) in the US surprised many by maintaining interest rates at 3.5-3.75 percent, despite expectations of a 25% hike due to persistent inflation above the 2% target since 2021.

According to Chairman Kevin Warsh, he was 'dead serious about inflation', and the pause may increase the chances of a rate hike in September if the factors driving price rises do not recede. Warsh also opted for no forward guidance on interest rates, suggesting he expects the war-related shocks to subside.

India's markets were positively affected by foreign inflows in July due to policies attracting NRI investment, and a rate hike could have complicated currency management amid hardening oil prices.