Federal Reserve policymakers are meeting in Washington to discuss interest rates, but are expected to keep the benchmark interest rate unchanged. Despite frustration over high prices, the Fed may not be ready to take action yet.
Inflation Concerns
Inflation has been above the Fed’s 2% target for over five years, and new Fed Chair Kevin Warsh has stated that he has “no tolerance” for elevated inflation. However, the Fed may be hesitant to raise rates due to uncertainty over the Iran war and its impact on oil prices.
The price of oil briefly surpassed $100 a barrel last week due to intensifying fighting, but has since settled down on hopes of reduced tensions. The uncertainty puts the Fed’s inflation fighters in a bind, as they must balance the need to control inflation with the risk of disrupting financial markets.
Economic Data
The Commerce Department is set to release the first look at April-June economic growth and the Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index, for June. This data may influence the Fed’s decision on interest rates.
Only 29% of Wall Street traders predict that the Fed will raise rates this week, but 76% foresee a rate hike in September. The Fed’s decision will be closely watched, as it may have significant implications for the economy.
Original reporting: KTBS 3 (Shreveport) — read the source article.
