In a Wall Street Journal article by Fed follower Nick Timiraos, next week’s Federal Reserve meeting is shaping up as one of the most uncertain in years.
Timiraos says the decision has become a close call as renewed Middle East tensions and higher oil prices strengthen the case for another rate hike, while softer inflation data continue to argue for leaving policy unchanged
The biggest wildcard remains new Fed Chair Kevin Warsh, who has repeatedly emphasized restoring price stability but has given no indication which way he is leaning. The case for holding rates unchanged June inflation data came in softer than expected, with underlying price pressures easing. Employment data do not show an overheating labor market that would require tighter policy.
Many Fed officials view tariffs and higher oil prices as temporary supply shocks that monetary policy should largely look through. Some policymakers believe inflation has likely peaked and should gradually move lower over coming quarters. Holding rates now would allow the Fed more time to assess whether the latest rise in oil prices proves temporary.