Sept. 16 (UPI) — The Federal Open Market Committee is meeting Wednesday to set its latest interest rate decision and investors expect a rate hike is coming.
The Federal Reserve has maintained benchmark interest rates in the 3.5% to 3.75% range for three years as it tries to tame inflation to a 2% annual rate. The expectation from investors is that the benchmark range will be raised to 3.75% to 4% on Wednesday.
War in Iran has created a global fuel shortage that is driving up oil prices, which has a trickle down effect on consumers, and the latest economic measures show inflation remains sticky, threatening to grow more. This combination of conditions has upped the likelihood of the central bank raising interest rates.
“The responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank,” Kevin Warsh, Federal Reserve chairman, said in an address in Jackson Hole, Wyo., last month. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”
Oil prices are again on the rise after peace talks between the United States and Iran have fallen apart. An outage on a Saudi Arabian pipeline used to circumvent the Strait of Hormuz has placed additional pressure on the oil trade with the price of Brent crude oil, the international benchmark, at $107 per barrel early Wednesday.
At the gas pump, the United States is seeing an average of $4.36 per gallon for regular grade gasoline on Wednesday, AAA reports.
Wednesday’s Federal Open Market Committee meeting is the first since July it again elected to leave interest rates unchanged.
Prices for consumer goods and services were up 3.4% in August over a year prior. The annual rate of inflation was the same in July.
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