Federal Reserve Set to Decide Rates as Warsh Faces First Major Inflation Test

The Federal Open Market Committee concludes its two-day meeting on July 29, with its interest rate decision due at 2 p.m. Eastern time, followed by a press conference led by Chair Kevin Warsh. Economists polled by major data providers overwhelmingly expect the central bank to leave its benchmark rate unchanged at 3.50% to 3.75%, which would mark the fifth consecutive meeting without a move. This meeting does not include an updated set of economic projections or a dot plot, so investors will focus on any changes to the policy statement and on Warsh's tone. The stakes are elevated because oil prices have climbed sharply during July amid renewed conflict between the United States and Iran, threatening to keep headline inflation hot and prompting traders to increase wagers on a rate increase later in the year. Adding to the uncertainty, Warsh has signaled a preference for less forward guidance than his predecessor, meaning markets may glean fewer clues about the path ahead. At the June meeting, officials were split, with half projecting a hike by year-end and half expecting no change.