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Supporting the Fed’s Patience: Holding Rates Allows Inflation Fight to Finish the Job

Published July 26, 2026 at 8:32 AM UTC

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The Federal Reserve’s decision to hold rates steady is a prudent move that prioritizes long-term price stability over short-term market demands. With core inflation still hovering above 3%, premature rate cuts could undo the progress made over the past two years. The US economy remains resilient, with GDP growth above trend and a tight labor market. Holding rates allows time for lagged effects of previous hikes to fully filter through the economy. For Malaysia, this stability is beneficial. It prevents sudden shifts in US monetary policy that could trigger volatile capital flows. Malaysian exporters, especially in electronics and palm oil, benefit from predictable exchange rates. Moreover, a patient Fed reduces the risk of a policy error that could spark a global recession. By staying the course, the Fed signals confidence in its inflation target, which in turn anchors global inflation expectations. This measured approach ultimately protects Malaysian savers and retirees whose assets are tied to US Treasuries and global bond markets.