Markets price in no July rate hike and 81% odds of a December increase as inflation remains above the Fed’s 2% target.
The Federal Reserve is expected to hold interest rates unchanged at its July 29 meeting, with 77% of traders pricing in no change, according to market data. Economists in a recent poll overwhelmingly forecast no rate adjustments for the remainder of 2024, citing persistent inflation above the Fed’s 2% goal for five years.
Despite the current hold, 81% of traders anticipate a rate hike by December, driven by elevated oil prices linked to geopolitical tensions. A majority of surveyed economists also see a higher probability of future rate increases, reflecting concerns over inflationary pressures.
Fed Chair Kevin Warsh emphasized the central bank’s commitment to restoring 2% inflation, signaling a focus on external shocks that could further elevate prices. Markets are pricing in two rate hikes by the end of Q1 2027, underscoring long-term tightening expectations.