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The U.S. Federal Reserve kept interest rates within the 3.50% to 3.75% range, amidst a split among members regarding the future course of monetary policy. Officials, including the President of the St. Louis Fed, emphasized that delaying a rate hike threatens the bank's credibility in fighting inflation, despite inflation remaining above the 2% target. Data indicates that markets currently assign approximately a 65-67% probability of a rate increase at the September meeting. Some committee members clarified that hesitation could entrench inflation, advocating for gradual and early increases to reduce the need for larger hikes later on. This stance comes amid a surge in Treasury yields and a decline in investor confidence in the Federal Reserve’s ability to control inflation.
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