{"id":791188,"date":"2026-07-29T11:20:11","date_gmt":"2026-07-29T11:20:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/791188\/"},"modified":"2026-07-29T11:20:11","modified_gmt":"2026-07-29T11:20:11","slug":"why-no-one-knows-what-to-expect-from-the-fed-decision-today","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/791188\/","title":{"rendered":"Why no one knows what to expect from the Fed decision today"},"content":{"rendered":"

Washington\u00a0\u2014\u00a0\n <\/p>\n

\n The Federal Reserve has been unusually silent about the future path of interest rates, with Chairman Kevin Warsh offering few signals as policymakers grapple with renewed inflation concerns and a murkier economic outlook.\n <\/p>\n

\n Fed officials will have a chance to clarify their thinking when they announce their latest rate decision at 2 p.m. ET Wednesday, followed by Warsh\u2019s post-meeting news conference at 2:30 p.m. ET.\n <\/p>\n

\n Inflation slowed sharply in June, according to the latest Consumer Price Index<\/a>, largely due to lower energy prices that month as tensions briefly eased in the war with Iran. The encouraging inflation report prompted investors to scale back expectations that the Fed would need to raise interest rates for the first time since July 2023 in order to keep price pressures in check.\n <\/p>\n

\n But the conflict in the Middle East escalated earlier this month, triggering a spike in global energy prices last week. Tensions have eased in recent days, prompting energy prices to decline accordingly. However, shipping through two key waterways \u2014 the Bab al-Mandeb Strait and the Strait of Hormuz \u2014 remains subdued. Nearly a quarter of the world\u2019s oil flows through the region. Meanwhile, Fed officials are debating how the rapid adoption of AI could impact inflation.\n <\/p>\n

\n The economic crosscurrents have made it difficult to understand where inflation is headed. Compounding that uncertainty, Warsh has declined to offer clear guidance on interest rates. Ahead of this week\u2019s policy meeting, markets are split <\/a>on whether the Fed will hold its benchmark lending rate steady for the fifth consecutive time or deliver a rate hike.\n <\/p>\n

\n It\u2019s a lack of clarity not seen in years.\n <\/p>\n

\n \u201cThe Fed is looking at all these inflationary impulses and determining if they will be there over the longer term,\u201d Narayana Kocherlakota, an economics professor at the University of Rochester and former president of the Federal Reserve Bank of Minneapolis, told CNN.\n <\/p>\n

\n \u201cBut it\u2019s becoming very difficult to know what the Fed is going to do in the next few months, because Chair Warsh has been studiously uncommunicative about how the Fed is going to react to these changes in economic conditions,\u201d Kocherlakota said.\n <\/p>\n

\n Warsh has long signaled that he intended to ditch a long-held practice known as \u201cforward guidance.\u201d\n <\/p>\n

\n Since 2000, Fed officials have generally used forward guidance to give investors a clearer sense of where interest rates were headed, arguing that greater transparency makes monetary policy more effective. But in his confirmation hearing<\/a> in April, Warsh said he wouldn\u2019t speculate on the economy\u2019s path as chairman.\n <\/p>\n

\n With the Fed\u2019s next move still an open question, it\u2019s unclear whether Warsh\u2019s break from decades of Fed communication has reduced \u2014 or amplified \u2014 uncertainty.\n <\/p>\n

\"The<\/p>\n

\n \u201cIt\u2019s going to lead to market volatility,\u201d said Kocherlakota. \u201cIt makes businesses more reluctant to invest, meaning they\u2019ll be less likely to demand workers to build the kinds of goods and services \u2026 because they\u2019re uncertain about what the Fed is going to be doing.\u201d\n <\/p>\n

\n \u201cThat kind of uncertainty, in my view, is a complete unforced error on the part of the Fed,\u201d he added.\n <\/p>\n

\n On the other hand, some argue that Fed officials have in recent years spoken too frequently about the economy.\n <\/p>\n

\n \u201cWe got to a point where the dissection of the Fed\u2019s forward guidance was so acutely broken down into parts that I\u2019m not sure it helped in the way it was meant to help either,\u201d said Kezia Samuel, chief market strategist at wealth management firm AssetMark.\n <\/p>\n

\n Fed officials largely agree that the central bank shouldn\u2019t respond to higher energy prices with interest rate hikes because those costs are expected to come down on their own.\n <\/p>\n

\n \u201cConventional wisdom among central bankers is to look through one-time price increases, such as those associated with higher tariffs and a jump in oil prices,\u201d Fed Governor Christopher Waller said this month.\n <\/p>\n

\n However, if price pressures persist, there\u2019s a far greater the risk that inflation broadens well beyond the energy market. That could begin to erode Americans\u2019 faith that inflation will eventually slow toward the Fed\u2019s 2% annual target.\n <\/p>\n

\n To get a sense of inflation\u2019s direction, central bankers focus on so-called core measures of inflation that strip out volatile food and energy prices. Core inflation gives economists and policymakers a good sense of how persistent price pressures may be, and to gauge Americans\u2019 view of prices, officials look at market- and survey-based measures of inflation expectations.\n <\/p>\n

\n Neither of those measures warrant imminent rate hikes, but that could change if the Iran war spirals out of control or persists for an extended period.\n <\/p>\n

\n Meanwhile, Fed officials are closely watching Big Tech\u2019s massive spending on AI data centers, which was discussed at the Fed\u2019s June policy meeting.\n <\/p>\n

\n \u201cMany participants noted that ongoing strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity,\u201d the meeting\u2019s minutes read. \u201cMost participants remarked that growth in economic activity that exceeded that of potential output, owing in part to strong AI business investment, could contribute to more persistent inflationary pressures.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"Washington\u00a0\u2014\u00a0 The Federal Reserve has been unusually silent about the future path of interest rates, with Chairman Kevin…\n","protected":false},"author":2,"featured_media":791189,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[28],"class_list":["post-791188","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/791188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=791188"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/791188\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/791189"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=791188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=791188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=791188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}