Fed Leaves Rates Unchanged 4th Time in Row Amid Inflation


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The Federal Reserve said Wednesday (6/17) it had left 
U.S. interest rates unchanged at 3.5-3.7% after a two-day meeting where 
policymakers assessed the continued impact of the Middle East conflict on U.S. 
inflation.

   Wednesday's decision marks the fourth consecutive time the central bank has 
chosen to hold the key U.S. interest rate steady since the beginning of 2026 
and for the first time under new central bank chair Kevin Warsh. The last 
policy adjustment, under former chair Jerome Powell, occurred in December when 
policymakers implemented a 25 basis point cut, bringing the benchmark down from 
its previous range of 3.75-4.0%.

   Central bank officials noted that risks to the economy -- particularly 
potential energy shocks from the ongoing Iran war -- warranted keeping 
borrowing costs steady rather than executing planned interest rate reductions.

   The Fed noted that economic activity was expanding at a solid pace despite 
elevated uncertainty owed, in part, to the conflict in the Middle East. It 
cited strong productivity growth and capital investment and job gains that had 
kept pace with the workforce, with little changes to the unemployment rate.

   Despite those positives, "inflation remains elevated relative to the 
Committee's 2 percent goal, in part reflecting supply shocks that have driven 
price increases in certain sectors, including energy," the central bank's 
Federal Open Market Committee said.

   Inflation, measured by the Consumer Price Index, accelerated for a third 
consecutive month to a 4.2% year-over-year headline reading in May. That marked 
the highest level since April 2023, driven primarily by a 30% spike in energy 
costs this year forced by the Iran war --  although crude prices have also 
dropped by a cumulative 30% since April 2026 on U.S.-Iran ceasefires.

   The retail price of gasoline in the U.S. averaged $4.052 gallon during the 
most recent week, ending June 15 -- up 91.2cts from a year ago -- data from the 
Energy Information Administration showed.

   Market moves at 2:05 p.m. ET:

NYMEX WTI for July delivery up $0.34, or 0.4%, to $76.39 bblICE Brent for 
August delivery  up $0.21, or 0.3%, to $79.17 bblNYMEX Gasoline futures for 
July up $0.0138 to $2.8943 gallonNYMEX ULSD for July up $0.0008 to $3.1694 
gallon.The U.S. Dollar Index rose 0.151 points to 99.43    




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