The Federal Reserve elected to keep rates steady at their meeting last week, but the decision was not unanimous. Three members voted to raise interest rates as pressure builds to control inflation, which has been above the targeted rate for the last five years. The motivation to raise rates is tied to energy prices; they eased in June with a short-lived truce, but as fighting in the Middle East resumed, energy prices soared.
The Personal Consumption Expenditures index for June was released later in the week, the PCE being the Fed’s preferred inflation gauge. The index shows core inflation in June was 3.3 percent, well above the Fed’s 2 percent target.
Before the Fed’s meeting, the odds were at 33 percent rates would rise, but most expected no change, with the Fed not wanting to disrupt financial markets. But for most, now expectations are for rate hike to take place in September; there is no Fed meeting scheduled for August. But plenty of economic data will be released between now and then, which will be factored into the decision.