Brent rises despite steady US Fed 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 headquarters. Getty Images

The US Fed’s rate decision arrives amid the ongoing Middle East conflict following joint US-Israeli military operations in Iran – an escalation that has spiked Brent crude’s price and complicated the US central bank’s inflation outlook.

“Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook,” 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.

“[Interest] rates are on hold, but the fracture beneath the surface is unmistakable, with Fed dissents reaching levels not seen in decades,” remarked SPI Asset Management managing partner Stephen Innes.

By Aparupa Mazumder

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