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The US Federal Reserve is widely expected to keep interest rates unchanged at its policy meeting this week as persistent inflation and escalating geopolitical tensions cloud the economic outlook.
The Federal Open Market Committee (FOMC), led by new Chair Kevin Warsh, begins its two-day meeting on Tuesday and is scheduled to announce its decision on Wednesday. Markets expect the Fed to leave its benchmark interest rate unchanged at 3.50-3.75 percent for a fifth consecutive meeting.
Warsh, appointed by President Donald Trump, has faced pressure from the White House to lower borrowing costs. However, policymakers remain cautious as inflation continues to run well above the Fed’s long-term 2 percent target, despite easing to 3.5 percent last month.
Fresh concerns have also emerged from the renewed US-Iran conflict, which has driven oil prices above $100 a barrel and raised fears of renewed inflationary pressure.
Fed officials have signaled they remain prepared to tighten monetary policy if inflation fails to ease. Governor Chris Waller recently warned that the central bank must be ready to act to prevent a repeat of the inflation surge seen in 2021 and 2022.