Federal Reserve seen holding rates next week amid Oil shock ‒ Reuters

A Reuters poll revealed that the Federal Reserve is most likely to keep interest rates unchanged for the rest of the year as it battles stubbornly high inflation that has remained above the Fed’s 2% goal for at least 5 years.

Money markets are pricing in two rate hikes by the end of Q1 2027, sponsored by high Oil prices due to the Gufl War. Traders should be aware that Fed Chair Kevin Warsh said the Fed is resolute in bringing inflation back to its 2% target, hinting that they’re squarely focused on inflation and external shocks that could drive prices higher.

Data from Prime Terminal indicates there’s no chance of a rate increase at the July 29 meeting, with odds for a hold being at 77%. However, for the December meeting, there is an 81% chance that the Fed could raise rates.

The survey showed that 104 economists expect no change to the Fed funds rate at the July meeting, while 78 see the Fed holding rates for the rest of the year. Despite this, 66% of the respondents indicated that the chance of a rate hike is higher.