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Fed likely to hold rates through year amid inflation and Oil shock

A Reuters poll cited 77% odds of a July 29 hold, while respondents also leaned toward higher-than-usual risk of a hike later this year.

Reported · Written up by our desk · Central Banks

A Reuters poll indicates the Federal Reserve is most likely to keep interest rates unchanged for the rest of the year, as it works through inflation that has stayed above its 2% goal for at least five years.

Money markets are reportedly pricing in two rate hikes by the end of Q1 2027, with high Oil prices linked to the shocks driving that outlook. Fed Chair Kevin Warsh also signaled the Fed is resolute in returning inflation to 2%, while focusing on both inflation pressures and external factors that could keep prices elevated.

Data from Prime Terminal showed no chance of a rate increase at the July 29 meeting, with a 77% probability assigned to a hold. For the December meeting, Prime Terminal put the chance of a rate increase at 81%.

In the same survey, 104 economists expected no change to the Fed funds rate at the July meeting, while 78 anticipated the Fed would hold rates for the rest of the year, and 66% of respondents said the likelihood of a hike is higher than usual.

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