A July rate hike from the Fed? The odds are rising
Market expectations for a Federal Reserve interest rate hike in July are rising due to geopolitical tensions in the Strait of Hormuz and concerns over persistent inflation. Rising oil prices and warnings from Fed officials have increased the probability of a rate increase despite cooling annual inflation data.
Why it matters
Changes in interest rates significantly impact global financial markets, borrowing costs, and the broader economic outlook.
The Federal Reserve is still expected by futures traders and prediction markets to maintain the status quo at its July meeting, leaving interest rates unchanged once again . However, it's going to be a close call.
The odds are rising Monday that the central bank makes a move to hike.
There's now a 46.5% chance that the Fed hikes interest rates by a quarter point on July 29, according to CME's FedWatch tool. That's up from 34% on Sunday.
On prediction market platform Kalshi , traders now see a 36% chance of a hike, up from under 20% on Sunday and under 10% earlier this month.
The rise in odds comes after President Donald Trump announced he is reinstating the U.S. blockade of Iranian ports near the Strait of Hormuz, and imposing a 20% toll on all cargo through the passageway.
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