Federal Reserve Set to Hold Rates a Fifth Time as Oil Revives Inflation Worry

The Federal Open Market Committee (FOMC) began a two-day meeting on Tuesday that economists expect to end with the benchmark rate held at 3.50% to 3.75%, a fifth consecutive pause, according to CBS News and other forecasters. Cooler consumer and producer price data for June gave the central bank room to wait, but a jump in oil prices toward and above $90 a barrel has revived concern that inflation will persist. Kevin Warsh, the chair of the Federal Reserve, has abandoned formal forward guidance, and market pricing has shifted toward a possible increase as soon as September.

The caution extends well beyond Washington. In Pakistan, the central bank held its policy rate at 11.5%, a decision Dawn reported satisfied foreign investors while local businesses complained that tight money is restricting activity and access to credit. In Japan, Prime Minister Sanae Takaichi's promise of a sales-tax cut on food has made slow progress, the Japan Times reported, leaving households exposed to rising prices while the government debates relief.

These cases share a policy bind. Central banks that spent two years fighting inflation now face a fresh, energy-driven price impulse at the same moment that growth and asset markets look fragile, narrowing the room to cut without renewing inflation pressure or to hold without deepening a slowdown.