Brent moves lower as US Fed maintains interest rates

Brent crude’s price has edged lower after the US Federal Reserve’s Federal Open Market Committee (FOMC) maintained its key interest rate at the range of 3.75-4% at its October policy meeting.

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The US central bank had raised interest rates in September for the first time since 2023, reversing the previous year's monetary easing cycle as sticky inflation persists.

The latest policy decision comes as the US-Iran conflict deepens the impasse, keeping commercial shipping through the vital Strait of Hormuz severely crippled.

Uncertainty remains elevated, “owing, in part, to geopolitical developments,” the US Fed said in a statement.

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

“The Fed did exactly what the market expected,” remarked SPI Asset Management managing partner Stephen Innes.

Months of escalation in the Middle East have pushed Brent crude’s price higher. This has complicated the US Fed’s inflation outlook as it remains committed to achieving a 2% inflation rate over the longer run.

“Inflation remains elevated,” the US Fed said.

“That leaves a second and likely final hike in December as the cleanest base case, taking the funds rate to 4% to 4.25%,” Innes said.

By Aparupa Mazumder

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