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Fed holds rates steady as markets weigh lingering inflation risks
The FOMC voted 9-3 to keep benchmark short-term rates unchanged, while the 30-year Treasury yield reached 5.2% and the Dow fell 2.2% on growing expectations of a future hike.
The Federal Reserve ended its July policymaking meeting with no rate increases and no forward guidance, but with extensive discussion that left markets focused on how quickly inflation can be brought back to the Fed's 2% target, which has been missed for five years, according to Yahoo Finance. The FOMC held benchmark short-term interest rates steady on July 29 in a 9-3 vote, and the reaction reflected concern about what the central bank can do to curb inflation without additional tightening. The 30-year Treasury yield rose to 5.2%, while the Dow closed down 1,153.18 points, or 2.19%. Cetera Financial Group Chief Investment Officer Gene Goldman said the market was not treating the hold as a dismissal of further action, framing current trading as a bet that a hike could come sooner. He pointed to September, right after Jackson Hole and alongside a new dot plot, as the meeting that matters most for expectations. TradeStation Global Head of Market Strategy David Russell tied the Fed's next move to broader inflation pressures, saying the Iran conflict and resumed escalation are key inputs. Russell added that energy prices, influenced by the Middle East situation, are likely to drive oil and therefore the inflation outlook policymakers face.
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