What that means for consumers

The Federal Reserve is expected to hold interest rates unchanged at its upcoming July meeting — as higher energy prices and renewed tensions with Iran have complicated the picture for Fed Chairman Kevin Warsh , despite cooler inflation data.

While Warsh took over a Fed that has seen inflation exceed its 2% target since 2021, the consumer price index — a broad measure of inflation — posted an unexpected decline last month, bringing the annual inflation rate down to 3.5% in June. But in the weeks that followed, oil prices jumped again amid the escalating conflict in the Middle East.

Traders scaled back expectations for an interest rate hike when the Fed meets this week, according to the CME Group's FedWatch gauge . Market pricing indicates the Fed is more likely to consider a rate move in September.