Fed Holds Rates Steady as Trade War Rages On

The benchmark lending (or Policy) rate has been kept steady at a range of 4.25% to 4.5% ("Fed Funds Target Range"). This rate is influenced through monetary policy decisions and is used by banks to lend money overnight. It is set by the FOMC (Federal Open Market Committee).

Once set, the Fed steers the rate into the target range, through various mechanisms. 

The Fed has flagged a risk of stagflation - involving higher unemployment and higher inflation - a toxic combination. The US struggled with this in the 1970s and early 1980s; toxic because you need to prioritize which issue to address first. Paul Volcker, in his time, chose to fight inflation. The Fed has a dual mandate to manage both, and its current target is maximum employment at 2% inflation.