Brent steady as US Fed holds interest rates

The US Federal Open Market Committee (FOMC) has maintained its key interest rates in the range of 3.50-3.75%, after three rate cuts in 2025.

IMAGE: The US Federal Reserve. Getty Images

The US Fed’s rate decision arrives as Washington and Tehran reach a preliminary peace deal to end hostilities and reopen the Strait of Hormuz to commercial vessel traffic – an escalation that had spiked Brent crude’s price and complicated the US central bank’s inflation outlook.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the US Fed said in a statement.

The US central bank has reiterated its commitment to achieving a 2% inflation rate over the longer run.

Higher interest rates in the US can dampen demand growth and make dollar-denominated commodities, like oil, more expensive for holders of other currencies.

However, by keeping interest rates unchanged, the Fed has left market participants guessing about its next move.

“The Fed was always going to treat the Iran deal cautiously,” remarked SPI Asset Management managing partner Stephen Innes.

By Aparupa Mazumder

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