Federal Reserve and Bank of Japan Keep Rates Steady as Global Risks Rise

The U.S. Federal Reserve left its policy rate unchanged at 3.50%‑3.75% at the July 29 meeting, with a 9‑3 vote. At the same time, the Bank of Japan maintained its short‑term rate at 1% after an 8‑1 vote in early August. Both central banks chose not to adjust rates despite persistent inflation driven by an ongoing energy crisis, higher oil prices, and heightened geopolitical tensions in Ukraine and the Persian Gulf, including concerns over the Strait of Hormuz.

Fed Chair Kevin War (Κέβιν Γουόρς) is also weighing a reduction in the number of regular meetings from the historic eight per year, a move that could change how monetary policy signals are communicated to markets. The decisions are expected to keep short‑term market volatility low but increase the importance of each meeting and any accompanying guidance, affecting global liquidity, borrowing costs, and investor expectations.