The probability of a Federal Reserve interest rate hike at the July 29 meeting has risen sharply, with CME's FedWatch tool now showing a 46.5% chance of a quarter-point increase, up from 34% on Sunday. On prediction market Kalshi, the odds climbed to 36% from under 20% on Sunday and under 10% earlier this month. The shift follows President Donald Trump's announcement of a renewed U.S. blockade of Iranian ports near the Strait of Hormuz and a 20% toll on cargo, which pushed U.S. oil prices up more than 5% to above $75 per barrel. Federal Reserve Governor Christopher Waller also warned against repeating the delayed rate hikes of 2021 and 2022, while cautioning against overcorrecting. The rising odds come ahead of the June Consumer Price Index report, with economists surveyed by Dow Jones expecting annual inflation of 3.8%, down from 4.2% in May, though Barclays warned that inflation pressures extend beyond energy and could force a more hawkish Fed stance.
Barclays PLCBarclays warned that inflation pressures could force a more hawkish Fed stance, which may impact their business outlook.