Fed Keeps September Rate Hike on Table Amid Ongoing Inflation Concerns
The US Federal Reserve has left open the possibility of raising interest rates in September due to persistent inflation concerns. In his August 28 Jackson Hole address, Federal Reserve Chairman Kevin Warsh emphasized the central bank's commitment to its 2% inflation target, stating that recent improvement is not yet sufficient to declare the inflation fight over.
The Fed's benchmark federal funds rate currently stands at 3.5% to 3.75%. The upcoming inflation data will be crucial in determining the next move of the central bank. Three policymakers, Beth Hammack, Neel Kashkari and Lorie Logan, voted for a 25-basis-point increase rather than another hold at the previous meeting.
Recent shorter-term trends have provided somewhat more encouraging signals. Fed Governor Christopher Waller said that three-month core inflation had declined steadily from 4.76% in February to 3.05% through July, although the latter rate was still inconsistent with the Fed's target.