Federal Reserve expected to hold rates steady after May inflation data

The Federal Open Market Committee is expected to leave interest rates unchanged when it concludes its two-day meeting on Wednesday. The decision follows a Labor Department report showing consumer prices rose 4.2 percent in May from a year earlier. In February, before the Iran conflict began, the annual rate stood at 2.4 percent.

A May jobs report released earlier also showed continued labor-market strength, another factor the central bank weighs when setting policy.

Inflation and policy outlook Economists and policymakers have begun discussing whether rate increases may be needed later this year. One former Treasury official said the latest inflation figures raise concern about how persistent price pressures could become.

The same official noted that expectations for lower rates by year-end have shifted, with the current debate focused on whether and when increases might occur. The tentative agreement to end hostilities between the U.S. and Iran contributed to the recent rise in prices, according to the former Treasury official.

Oil prices fell and stocks rose after the deal was announced. m. Eastern time after the meeting concludes.