Fed Set to Hold Rates Amid Rising Inflation Fears

The US Federal Reserve is expected to maintain its benchmark interest rate at its upcoming two-day meeting. Policymakers are seen as more willing to tighten monetary policy when they meet again on September 15-16, according to AP.

Inflation has remained above the central bank's 2% target for over five years, despite 11 rate hikes since 2021. Fed Chair Kevin Warsh has stated that he has 'no tolerance' for elevated inflation, adding pressure to policymakers.

BNP Paribas strategists Joseph Egelhof and Guneet Dhingra suggest a surprise rate increase this week is possible, but unlikely due to potential market instability. They expect policymakers to wait until September 15-16 to avoid unsettling financial markets.