US Fed Faces Dilemma as Inflation Hawks Circle Interest Rate Decision
US Federal Reserve policymakers are expected to hold interest rates steady on Wednesday at 3.50-3.75% for the fifth consecutive meeting, despite concerns about inflation fueled by President Donald Trump's war with Iran.
The Fed's Open Market Committee (FOMC) will announce its decision at 2:00 pm EST, followed by a press conference with Chairman Kevin Warsh. Analysts say some policymakers may dissent in favor of a rate hike due to rising inflation expectations.
Consumer inflation eased to 3.5% year-over-year last month, but is expected to rise again on the back of seesawing oil prices from Trump's war with Iran. The uncertainty around the outcome of the meeting is unusual and fueled by Warsh's refusal to publicly share his views on the economic outlook.
Gregory Daco, chief economist at EY-Parthenon, said 'This is a highly unusual meeting in the sense that we don't really know what the Fed chair's current thinking is.'