FOMC Meeting Sparks Uncertainty Over Interest Rate Decision

The Federal Open Market Committee (FOMC) is holding its fifth meeting of the year under Chair Kevin Warsh. The committee's task is to make sense of a complex economic environment, where longer-term trendlines are moving in the right direction while real-time data suggests resurgent inflation.

The FOMC has been presented with mixed signals. On one hand, inflation as measured by the Bureau of Labor Statistics' consumer price index fell from 4.2% in May to 3.5% in June. On the other hand, oil prices have risen due to renewed tensions in the Middle East, and market rates are already pricing in more inflation.

Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, believes that if the committee or Chair Warsh offer any guidance, they will likely indicate that the decision between holding rates steady or hiking in September will be data dependent. The FOMC's interest rate decision will be announced on Wednesday afternoon, with Warsh's press conference to follow.