Fed Keeps Rates Unchanged Amid Frustration Over High Inflation

The Federal Reserve is expected to keep interest rates unchanged at its upcoming meeting, despite growing frustration over high inflation. Fed Chair Kevin Warsh has expressed his 'no tolerance' for elevated inflation, but policymakers may not be ready to act yet.

Warsh and the rate-setting committee are considering holding off on a rate hike this week, with only 29% of Wall Street traders predicting a rise in rates. However, 76% foresee a rate hike in September, according to the CME FedWatch tool.

The uncertainty surrounding the Iran war has added to inflation pressure, as energy prices have surged due to disruptions in oil supplies. This has put the Fed's inflation fighters in a bind, with some arguing that they should set monetary conditions on a hope that oil prices will reverse course and stay low, while others believe they should 'eschew wishful thinking' and do their job of minimizing the probabilities that inflation will exceed target.