world-economy

Fed Poised for Critical Rate Decision as Inflation Remains Sticky

The Federal Reserve is set to make a pivotal choice on interest rates Wednesday. Policymakers are expected to hold rates steady, though they could raise them to combat persistent inflation. At their last meeting in June, Fed committee members signaled their next move would likely be up. Annual inflation hit 4.2% in May—the highest in three years—driven partly by a wartime spike in gasoline prices, but moderated somewhat in June. Fed Chair Kevin Warsh told lawmakers the committee has "no tolerance for persistently elevated inflation" and remains committed to restoring price stability. Higher interest rates typically weaken job markets while lower rates encourage hiring. A rebound in spring labor conditions may give policymakers flexibility to hold rates steady for now.