Source: Fortune.com
Summary
The Federal Reserve has kept its benchmark interest rate unchanged at 3.6%, despite high inflation caused by the Iran war and energy price spikes. The decision was made with a 9-3 vote, with three dissenting members calling for a rate hike. The Fed has been struggling to control inflation, which has been above its 2% target for over five years. New Fed Chair Kevin Warsh has declared he has “no tolerance” for elevated inflation, but the central bank may wait for more economic data before making a move. Most Wall Street traders expect a rate hike in September.
Our Reading
The numbers tell one story.
The Fed’s decision to keep rates unchanged may seem like a surprise, but it’s just a delay of the inevitable. The central bank is stuck between a rock and a hard place, with inflation persistently high and the Iran war creating uncertainty. The dissenting votes from three Fed members show that some policymakers are getting impatient. New Fed Chair Kevin Warsh’s “no tolerance” for inflation is just a signal that the Fed is getting ready to act. The market expects a rate hike in September, and it’s likely that the Fed will deliver.
One thing is clear: the Fed’s patience is wearing thin.
Author: Evan Null
