Fed Officials Weigh Another Rate Hike Amid Inflation Risks

Pressure is building within the Federal Reserve to raise interest rates again as officials weigh renewed inflation risks from the Middle East conflict. The latest data shows a slowdown in prices for June, falling to 3.7% from 4.1%, but this decline was mostly driven by a drop in energy prices due to a break in fighting with Iran.

The Federal Reserve opted to hold its benchmark rate steady at the conclusion of its July meeting at a range of 3.5% to 3.75%, but three regional bank presidents dissented in favor of an increase, which is the first time in 10 years that three officials have done so in the same direction.

Several Fed officials, including those who voted in favor of the July pause, have warned in speeches and other appearances that they may be forced to raise rates if inflation doesn’t show sustained signs of slowing. Lorie Logan, the Dallas Fed president, already called for increasing rates in a mid-July speech.

Fed chair Kevin Warsh renewed his commitment to restoring price stability after more than half a decade of above-target inflation, but it came after a decision to delay action for at least another eight weeks.