US Fed opens two-day meeting with markets expecting rate hold

The decision by the 12 voting members of the Federal Open Market Committee (FOMC) will be announced at 2:00 pm local time (1800GMT) on Wednesday, with a press conference by Fed Chair Kevin Warsh to follow.

At their last meeting in September, the FOMC voted to raise rates for the first time in three years, as policymakers decided to tackle stubbornly high inflation that has remained above target for years.

The Fed has missed its long-term two-percent target for inflation for more than five years, with price increases hitting a peak in the pandemic but never returning to the level the central bank deems acceptable.

Inflation has been fuelled by high energy prices since US President Donald Trump launched the war on Iran in late February, his tariff policies and an Artificial Intelligence (AI) investment boom.

Trump's Republican Party is seeking to hold off a stiff challenge by Democrats seeking to wrest control of both houses of Congress at midterm elections next week.

The US president's handling of the economy is a key issue for voters, with overall economic growth remaining steady but many working-class families struggling with an uneven distribution of wealth.

At its last meeting, the Fed raised interest rates by 25 basis points to a target range between 3.75 and 4.00 percent.

Since then, however, key policymakers have suggested that there was no urgency to raise them again -- even as they hinted at a second hike in December.

Speaking at the IMF-World Bank Annual Meetings in Bangkok earlier this month, Warsh said US economic conditions had "broadly conformed to our expectations" since the committee's last meeting.

On Tuesday, markets put the probability of rates being held steady at near 90 percent, as per CME's FedWatch tool.