Overview
- The Federal Open Market Committee will decide on interest rates at 2:00 pm local time on Wednesday and is widely expected to leave the federal funds rate unchanged.
- The Fed's preferred inflation measure, the PCE price index, fell from a 2022 peak of about 7.2% to roughly 2.2% by late 2024 before rising again to a three-year high of about 3.9% in May.
- Energy supply disruptions after U.S. and Israeli strikes on Iran in late February have sharply curtailed Gulf oil and gas flows, pushing fuel costs up and passing higher prices into other goods and services.
- President Trump has taken actions that critics say challenge the Fed's independence, including a probe of Jerome Powell and moves to remove Governor Lisa Cook, while some Fed officials and economists say policy should follow the data.
- Markets still price at least one more hike before year-end and several officials signal December as the likely timing if incoming inflation and consumer data do not cool, a path that would keep borrowing costs high for households and weigh on housing activity.