The Federal Reserve has kept interest rates in the United States on hold for the fifth meeting in a row, defying pressure in markets to lift borrowing costs as Donald Trump’s Iran war unleashes a fresh jolt of inflation.
Following its meeting on Wednesday the central bank hinted that rate rises could come as soon as September as a rapid increase in energy prices threatens to morph into a broad bout of inflation.
The rate-setting Federal Open Market Committee continued to warn of the risks emanating from the Middle East and reiterated its pledge to “deliver price stability” as it opted to hold short-term US borrowing costs within a 3.5-3.75 per cent range.
This time, three of the 12 voters – Lorie Logan of the Dallas Fed, Cleveland’s Beth Hammack and Minneapolis’s Neel Kashkari – backed a quarter-point rise in rates amid signs that businesses and households in their districts were struggling to cope with higher inflation.
READ MORE
Treasury yields dropped after the Federal Reserve held rates steady, as traders dialled back expectations of interest rate increases in the coming 12 months.
What size does your pension actually need to be for a comfortable retirement?
The two-year yield, which moves with interest rate expectations, reversed course to trade 0.02 percentage points lower at 4.25 per cent.
Traders in the futures market scaled back expectations on Fed rate rises in the coming year, now pricing in just under two interest rate increases by April compared with between two and three before the statement. – Copyright The Financial Times Limited 2026
