The US Federal Reserve has a dual mandate to keep inflation to its long-term target while also delivering maximum employment. (EPA Images pic)WASHINGTON: The US Federal Reserve is set to hold its second meeting under new chairman Kevin Warsh starting Tuesday, with markets expecting policymakers to keep interest rates steady amid inflation concerns that could be exacerbated by US President Donald Trump's renewed war on Iran.Warsh was chosen to lead the US central bank by Trump, who has made his demand for lower interest rates clear as he has exerted unprecedented pressure on the independent monetary policy making body.After two days of closed-door sessions, the Fed's open market committee (FOMC) will announce its decision on Wednesday at 2pm (2am Thursday Malaysian time), followed by a press conference by Warsh.Most investors expect the Fed to hold rates steady at 3.50-3.75 percent for the fifth straight meeting, according to CME's FedWatch monitoring tool.US consumer inflation eased to 3.5% year-on-year last month, but remains far higher than the Fed's long-term two-percent target, which it has not achieved for more than five years.Since last week, a ramping up of hostilities has seen intense US strikes and Tehran's retaliatory action targeting Washington's allies across the region, while Yemen's Houthi rebels have threatened to blockade the Red Sea oil trading route.The fighting has sent energy prices soaring once more, with the benchmark oil futures contract breaching US$100 per barrel for the first time since late May, when energy prices were on their way down.At the Fed, policymakers have been losing patience with persistent inflation, indicating that a rate hike may be near.The Fed "has to be ready to tighten monetary policy to prevent a repeat of the 2021-to-2022 inflation episode," Fed Governor Chris Waller said last week."Sternly staring at inflation until it melts before our withering gaze is not an option."'Hawkish core'Since taking office, Warsh has vowed to reduce or eliminate the amount of forward guidance the Fed provides on its decision-making process, a move that has received mixed reactions.The new chairman has said that providing forward guidance locks policymakers into positions that they may need to change. Some analysts, however, argue that opacity in decision-making creates more uncertainty for markets.In public statements since taking…
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