Fed July Rate-Hike Odds Climb to 46.5% as Oil Tops $75 and Inflation Risks Build
Updated
Updated · CNBC · Jul 13
Fed July Rate-Hike Odds Climb to 46.5% as Oil Tops $75 and Inflation Risks Build
3 articles · Updated · CNBC · Jul 13
Summary
CME FedWatch put the chance of a quarter-point Fed hike on July 29 at 46.5% Monday, up from 34% a day earlier, while Kalshi rose to 36% from under 20%.
Trump's reinstated blockade of Iranian ports near the Strait of Hormuz and a 20% cargo toll helped push U.S. oil more than 5% higher above $75 a barrel, sharpening fears of renewed price pressure.
Christopher Waller added to the hawkish shift, warning the Fed must not repeat its 2021-22 mistake of waiting too long to raise rates, even as he cautioned against moving too fast.
June CPI is still expected to cool to 3.8% from 4.2% in May, but Barclays said inflation risks now extend beyond energy as earlier oil shocks and AI-driven price increases keep the outlook hot.
With oil prices soaring and AI driving up costs, can the Fed tame inflation without crashing the economy?
How is a naval blockade in the Strait of Hormuz forcing the Federal Reserve to reconsider US interest rates?
U.S. Inflation Nears 4%: Fed Signals Rate Hikes as Middle East Conflict Drives Energy Crisis
Overview
As of July 2026, the United States economy faces persistent inflation and rising uncertainty, largely driven by ongoing conflict in the Middle East. Despite a robust job market and steady economic growth, inflation is outpacing wage gains, putting pressure on households. This has led to a significant shift in Federal Reserve policy expectations, with markets now anticipating possible interest rate hikes instead of cuts. The Fed’s main challenge is to bring inflation back to its 2% target while navigating global instability and energy disruptions, making its future decisions highly dependent on evolving economic and geopolitical conditions.