Fed Seen Holding Rates in June With 98.8% Odds as Iran War Lifts Inflation Risks
Updated
Updated · Benzinga · May 19
Fed Seen Holding Rates in June With 98.8% Odds as Iran War Lifts Inflation Risks
11 articles · Updated · Benzinga · May 19
CME FedWatch shows a 98.8% chance the Federal Reserve leaves rates unchanged in June, even as economists warn the Iran war is pushing inflation risks higher.
Treasury yields signal that pressure: the 10-year rose to 4.6% and the two-year to 4.07%, levels cited by Mark Zandi and Ed Yardeni as evidence markets expect tighter policy.
Yardeni expects the Fed to drop its easing bias at the June meeting and follow with a 25-basis-point rate hike in July, though FedWatch still assigns July a 94.6% chance of no change.
The debate comes as U.S. stocks remain resilient in 2026—up 7.94% for the S&P 500 and 12.29% for the Nasdaq—even with geopolitical tensions threatening broader economic damage.
Why does Wall Street seem to be ignoring war drums and recession warnings from top economists?
As a Mideast war fuels inflation, can an AI boom prevent the U.S. economy from falling into recession?