Fed Leaves Rates Unchanged as Market Awaits September Rate Hike

The Federal Reserve's decision to leave interest rates unchanged at 3.50-3.75% has done little to dispel expectations that borrowing costs could rise once more this year, according to analysts.

Persistent inflation, geopolitical risks, and higher energy prices continue to cloud the policy outlook, with investors monitoring upcoming US inflation data and developments in the Middle East.

The Fed's decision was widely expected, but three officials dissented in favor of a 25-basis-point rate hike, citing strong inflationary pressures and upside risks to inflation due to higher US import tariffs and rising energy costs linked to tensions with Iran.

Piyasak Manason, head of economic research at InnovestX Securities, notes that the market's attention has shifted to the Fed's September meeting, where a 57% probability of a rate hike is seen by investors, along with an 83% chance the Fed will raise rates at least once before the end of this year.