Treasury report highlights hawkish Fed outlook amid inflation and geopolitical tensions

25 bps increase jumps to 37%11%

The Treasury Borrowing Advisory Committee reported a more hawkish Fed outlook with increased inflation projections and potential rate hikes, influenced by geopolitical tensions in the Middle East and elevated energy prices, contributing to market uncertainty ahead of September.

FOMC votes 9-3 to hold rates steady amid inflation concerns

No change surges to 63%20%

The FOMC's decision to hold rates steady with some dissenters voting for an increase reflected ongoing inflation worries, initially boosting confidence in no change but also increasing uncertainty about future hikes.

Rising Market Odds for September Rate Hike Amid Inflation and Geopolitical Concerns

25 bps increase rises to 56%3%

As of early August, market data indicated increasing probability of a 25 bps rate hike at the September FOMC meeting, driven by persistent inflation pressures and geopolitical tensions, particularly the Middle East conflict. This shift reflects the Fed's hawkish stance and the market's adjustment to a 'higher for longer' interest rate environment.

Federal Reserve holds interest rate at 3.75% amid DOJ criminal investigation into Chair Powell

No change surges to 63%20%

The Federal Reserve paused after three consecutive rate cuts, maintaining the benchmark interest rate at 3.75%. Chair Jerome Powell faced a Department of Justice criminal investigation over alleged false statements to Congress, adding political complexity but not altering the Fed's cautious monetary policy stance.

Geopolitical tensions ease as U.S.-Iran hostilities pause, easing inflation concerns

No change jumps to 53%14%

A temporary pause in U.S.-Iran hostilities in early August 2026 led to a decline in oil prices and reduced near-term inflation fears. This development contributed to market reassessment of Fed rate hike probabilities, slightly lowering the odds of aggressive tightening.

Markets react to Fed's July decision and geopolitical tensions easing

No change surges to 64%21%

Following the July Fed decision, markets showed volatility influenced by easing U.S.-Iran hostilities and fluctuating oil prices, which affected inflation outlooks and Fed rate expectations. This contributed to price movements favoring 'No change' and '25 bps increase' outcomes as investors reassessed risks.

Federal Reserve keeps rates unchanged amid inflation concerns and internal dissent

No change surges to 54%15%

At the July FOMC meeting, the Fed again held rates steady at 3.50%–3.75%, despite three dissenting votes favoring a 25 bps hike. Inflation remained elevated due to energy price shocks from the U.S.-Iran conflict, maintaining market uncertainty but leaning toward no change or a modest increase.

Federal Reserve maintains rates at 3.50%-3.75% with no forward guidance

25 bps increase surges to 56%18%

The July 28-29 FOMC meeting resulted in a unanimous decision to keep rates steady at 3.50%-3.75% and maintain the interest rate on reserve balances at 3.65%. The Fed continued its policy of maintaining ample reserves and refrained from providing forward guidance, reinforcing the market's view that a modest rate hike is likely in the near future, supporting the rise in probability for a 25 bps increase in September.

Fed Chair Warsh signals ongoing 'family fight' over rate policy amid inflation and geopolitical risks

25 bps increase surges to 56%16%

Chair Kevin Warsh described internal Fed debates as a 'family fight' reflecting differing views on inflation risks and rate policy. The Fed scrapped forward guidance, increasing uncertainty about future moves. Elevated inflation driven by energy prices and Middle East tensions contributed to market expectations of a possible rate hike in September.

Fed Chair Kevin Warsh Commits to Press Conferences Amid Rate Decision

No change jumps to 63%7%

Following the July 29 meeting, Fed Chair Kevin Warsh committed to holding press conferences for the remainder of 2026, signaling transparency and ongoing communication about monetary policy. This helped markets interpret the Fed's cautious stance and hawkish outlook, affecting expectations for future rate moves.

Federal Reserve holds interest rates steady but three officials dissent favoring a hike

25 bps increase rises to 45%4%

On July 29, 2026, the Federal Reserve again held the federal funds rate steady at 3.50%-3.75%, but three FOMC members dissented, preferring a 25 bps increase due to persistent inflation and geopolitical risks. This division highlighted growing hawkish sentiment within the Fed and reinforced market expectations for a rate hike at the September meeting.

Federal Reserve maintains interest rates and announces five task forces

At the July FOMC meeting, the Federal Reserve kept interest rates unchanged and announced the creation of five task forces to review monetary policy decision-making and communication, signaling a cautious approach amid persistent inflation and economic uncertainty.

Federal Reserve holds rates steady at 3.50%-3.75% in a divided 9-3 vote

At the July 29, 2026 meeting, the Federal Reserve again held the federal funds rate steady at 3.50%-3.75%, with three officials dissenting in favor of a 25 bps hike. The decision reflected ongoing concerns about elevated inflation and energy prices, with markets pricing in a high probability of a rate hike later in 2026.

Fed Chair Kevin Warsh Highlights Intense Debate and Commitment to Inflation Control

25 bps increase surges to 53%16%

Following the July 29 meeting, Fed Chair Kevin Warsh described the internal debate as a 'good family fight' and reiterated the Fed's commitment to price stability, emphasizing there is no 'soft inflation target.' This communication reinforced market expectations of potential rate hikes if inflation remains elevated, influencing the rise in the 25 bps increase probability.

Fed Chair Warsh emphasizes commitment to 2% inflation target amid divided Fed

25 bps increase rises to 60%4%

During the July 29 press conference, Chair Kevin Warsh reiterated the Fed's commitment to price stability and acknowledged the divided views within the committee. His remarks reinforced market expectations for a possible rate hike in September if inflation remains elevated.

Fed Chair Kevin Warsh signals commitment to price stability amid inflation concerns

25 bps increase jumps to 60%6%

At the July FOMC press conference, Chair Warsh emphasized the Fed's focus on restoring price stability and indicated that the committee remains data-dependent, keeping the possibility of future rate hikes open given persistent inflation.

Federal Reserve holds rates steady in first meeting under Chair Kevin Warsh

No change dips to 43%2%

In Chair Warsh's first FOMC meeting, the Fed held rates steady amid ongoing inflation and a strengthening labor market, signaling a cautious approach that supported the no change outcome while markets priced in a possible hike later in the year.

New Fed Chair Kevin Warsh signals vigilance on inflation, holds rates steady

No change surges to 63%22%

At the July FOMC meeting, new Chair Kevin Warsh confirmed the committee's decision to keep rates unchanged at 3.50%-3.75%, emphasizing the Fed's readiness to act if inflation pressures persist. The meeting highlighted internal divisions with some members favoring hikes, but the overall stance was a cautious pause, influencing market pricing toward no change or a modest hike.

Market Reacts Sharply to Fed's Decision to Hold Rates Steady

25 bps increase jumps to 50%12%

Following the Fed's decision, Treasury yields spiked and stock markets fell sharply, reflecting investor uncertainty and increased expectations for future rate hikes. This market reaction contributed to the rising probability of a 25 bps increase in the September meeting.

Federal Reserve holds interest rates steady in a divided vote

No change surges to 68%15%

The Fed voted 9-3 to keep rates at 3.50%-3.75% at the July meeting, with three officials dissenting in favor of a 25 bps hike due to inflation risks from energy prices and supply disruptions. The decision reflected internal division but maintained the status quo, supporting market expectations of no change or a modest increase by September.

Fed Chair Kevin Warsh Emphasizes Commitment to Inflation Target Despite Rate Pause

25 bps increase rises to 19%3%

Chair Kevin Warsh reiterated the Fed's commitment to returning inflation to the 2% target, dismissing any notion of a 'soft' inflation target. He indicated that while rates were held steady, future hikes remain possible if inflation persists, influencing market expectations toward a likely 25 bps increase in September.

Federal Reserve announces maintenance of interest rate paid on reserve balances at 3.65%

No change jumps to 49%8%

The Fed's unanimous decision to maintain the interest rate on reserve balances at 3.65% signaled continued monetary policy caution ahead of the September meeting, reinforcing expectations of no immediate rate hikes or cuts.

Fed Chair Warsh commits to press conferences amid market volatility

No change surges to 68%15%

Following the July meeting, Fed Chair Kevin Warsh committed to continuing press conferences for the remainder of 2026, aiming to improve communication amid internal divisions and market volatility caused by inflation and geopolitical tensions. This transparency helped stabilize market expectations around the Fed's policy path.

Federal Reserve issues statement maintaining interest rate paid on reserve balances at 3.65%

No change surges to 63%20%

The Fed announced on July 29 that it would maintain the interest rate paid on reserve balances at 3.65%, signaling continued policy stability ahead of the September meeting and reinforcing market expectations of no rate change.

Fed meeting preview highlights internal debate and market expectations for September rate move

Ahead of the July 28-29 FOMC meeting, market participants anticipated a cautious Fed stance with a 62% probability of no change and 38% chance of a rate hike. The Fed faced a "family fight" over policy direction amid mixed inflation and labor market data, setting the stage for September decisions.

Fed leadership signals possible rate hike amid inflation and labor market concerns

25 bps increase jumps to 52%14%

Ahead of the September meeting, Fed Chair Kevin Warsh described internal debates as a "family fight" over future rate moves, with investors increasingly anticipating a 25 bps hike due to persistent inflation and a resilient labor market. This contributed to rising market prices for the 25 bps increase outcome.

Rising geopolitical tensions and inflation concerns influence Fed rate hike expectations

25 bps increase jumps to 45%9%

Escalating tensions between the U.S. and Iran, along with persistent inflationary pressures, increased market expectations for a 25 basis point rate hike at the September Fed meeting. Analysts noted that the labor market remained resilient, and inflation risks were elevated, prompting investors to price in a higher likelihood of rate increases.

Market odds rise for 25 bps Fed rate hike in September amid inflation and geopolitical concerns

25 bps increase jumps to 59%9%

By late July 2026, market expectations for a 25 basis points rate increase in September rose to about 55%, driven by persistent inflation and tensions in the Middle East. This shift in sentiment contributed to the rising probability of the 25 bps increase outcome in the prediction market.

Investors anticipate Fed rate hike in September amid inflation and geopolitical tensions

25 bps increase jumps to 54%13%

By late July 2026, investors increasingly expected a 25 bps rate hike at the September FOMC meeting, driven by persistent inflation, energy price volatility from Middle East tensions, and a resilient labor market. Market data showed a 55% chance of a 25 bps increase and 26% chance of a 50+ bps hike, reflecting growing hawkish sentiment.

Market anticipates Fed rate hike in September amid inflation and geopolitical tensions

25 bps increase jumps to 37%6%

As the September FOMC meeting approaches, market odds for a 25 bps rate hike increased to around 55%, reflecting concerns over inflation and geopolitical risks. This anticipation was driven by recent economic data and Fed officials' hawkish comments, impacting market pricing ahead of the meeting.

Rising market expectations for September Fed rate hike amid inflation and geopolitical tensions

25 bps increase surges to 45%21%

By late July, market data indicated a growing probability of a 25 bps rate increase in the September FOMC meeting, driven by persistent inflation pressures and geopolitical risks such as the US-Iran conflict. Analysts highlighted the Fed's internal debates and the possibility of tightening monetary policy if inflation remains elevated.

Rising market odds for a 25 bps Fed rate hike in September amid inflation and geopolitical tensions

25 bps increase surges to 50%22%

As of late July, market expectations increased for a 25 basis point rate hike at the September FOMC meeting, driven by persistent inflation pressures and geopolitical risks such as the conflict in the Middle East. The bond market reflected this with rising Treasury yields, and analysts highlighted the Fed's internal debate described by Chair Warsh as a "family fight" over future rate policy.

Market anticipates 25 bps rate hike in September amid hawkish Fed signals

25 bps increase jumps to 48%10%

Investor expectations shifted toward a 55% probability of a 25 bps increase at the September FOMC meeting, driven by hawkish comments from Fed officials and persistent inflation concerns, reflected in rising prices for the 25 bps increase outcome in prediction markets.

Market Pricing Shows 55% Chance of 25 bps Fed Rate Hike in September 2026

25 bps increase jumps to 36%8%

As of late July, market data indicated a 55% probability of a 25 basis point rate increase at the September FOMC meeting, reflecting growing investor expectations for tightening monetary policy amid persistent inflation and geopolitical risks. This sentiment influenced the rising price for the 25 bps increase outcome in the prediction market.

Fed Vice Chair Jefferson Discusses Navigating Economic Shocks Amid Inflation and Geopolitical Risks

No change dips to 43%2%

Vice Chair Philip N. Jefferson highlighted the challenges the Fed faces balancing inflation control with economic growth amid ongoing geopolitical tensions and energy price volatility. His remarks underscored the Fed's cautious approach and the conditional nature of future rate decisions, influencing market expectations for September.

Federal Reserve Governor Lisa Cook signals inflation risks outweigh employment concerns

25 bps increase jumps to 53%8%

In a speech on July 15, Governor Lisa Cook highlighted that inflation remains well above the Fed's 2% target and supports maintaining restrictive monetary policy until stronger evidence of sustained disinflation emerges. This hawkish tone contributed to increased market pricing for a 25 bps rate hike.

Federal Reserve Governor Cook Highlights Economic Resilience and Inflation Challenges

Governor Cook's speech emphasized stronger-than-expected GDP growth forecasts for 2026 and persistent inflation above target, driven by core goods prices and productivity growth. This reinforced market expectations that the Fed would maintain a cautious stance on rates, with potential hikes if inflation remains elevated.

Governor Lisa D. Cook highlights strong GDP growth and labor productivity

25 bps increase jumps to 49%7%

In a speech, Governor Cook reported that GDP growth in 2025 was 2.0% and forecasted 2.2% for 2026, exceeding prior expectations. She emphasized booming labor productivity, reinforcing the Fed's view of a resilient economy, supporting the likelihood of a rate hike.

June CPI Inflation Falls to 3.5%, Below Forecast

No change dips to 39%2%

The Consumer Price Index for June 2026 showed a decline in inflation to 3.5%, below expectations, but core shelter inflation remained elevated. This data was closely watched ahead of the July FOMC meeting and influenced market expectations for the Fed's rate decision.

House Financial Services Committee Hears Fed Chair Warsh Testimony on Monetary Policy

25 bps increase jumps to 51%13%

Federal Reserve Chair Kevin Warsh testified before the House Committee on Financial Services, emphasizing the Fed's commitment to price stability and signaling a cautious but hawkish stance. This reinforced market expectations for a possible rate hike in September, contributing to the rise in the 25 bps increase contract price.

June 2026 CPI inflation falls to 3.5%, below expectations

The June 2026 Consumer Price Index showed inflation cooling to 3.5%, driven by a sharp drop in energy prices, providing the Fed some breathing room but leaving uncertainty due to geopolitical risks and core inflation remaining sticky.

Federal Reserve Chair Kevin Warsh Signals Hawkish Stance in July Speeches

25 bps increase surges to 38%22%

In speeches during July 2026, Chair Warsh emphasized the Fed's focus on price stability and the challenges posed by inflation and geopolitical risks, contributing to market expectations of a possible rate hike in September.

Fed Chair Kevin Warsh testifies before House Financial Services Committee

25 bps increase jumps to 49%13%

Kevin Warsh testified emphasizing the Fed's commitment to price stability and signaling that interest rate hikes may be necessary if inflation does not cool. This reinforced market expectations for a 25 bps increase in the near future, contributing to rising probabilities for a rate hike in September.

Fed Officials Deliver Speeches Highlighting Inflation Persistence and Economic Outlook

25 bps increase rises to 39%2%

Several Federal Reserve officials, including Vice Chair Michelle Bowman and Governor Michael Barr, gave speeches emphasizing the challenges of persistent inflation and the Fed's commitment to price stability. These communications reinforced market expectations for a cautious approach, supporting the probability of a rate hike later in 2026.

June CPI Data Shows Inflation Remains Elevated at 3.4% Annual Rate

25 bps increase surges to 38%22%

The Consumer Price Index for June 2026 indicated inflation at 3.4% annually, slightly down from May but still above the Fed's 2% target, reinforcing expectations for continued vigilance on inflation and potential rate hikes.

June CPI report shows inflation falls to 3.5%, but core shelter inflation remains elevated

No change dips to 59%2%

The July 14 release of June CPI data showed a decline in headline inflation to 3.5%, below forecasts, but core shelter inflation stayed high, indicating ongoing inflationary pressures that support the Fed's cautious stance on rate changes.

Speech by Governor Cook emphasizes resilient economic growth and inflation outlook

No change rises to 59%2%

Governor Cook highlighted stronger-than-expected GDP growth and inflation forecasts, reinforcing expectations that the Fed would maintain or cautiously adjust rates, influencing market sentiment toward no change or a modest hike.

Governor Cook warns inflation remains above expectations for 2026

25 bps increase surges to 53%28%

Governor Lisa Cook highlighted that headline and core inflation for 2026 are running about 1 percentage point higher than expected, driven by core goods prices rising at a 5% annual pace, reinforcing the Fed's hawkish stance and market anticipation of a rate hike.

Federal Reserve Officials Deliver Hawkish Speeches Highlighting Inflation Risks

25 bps increase jumps to 51%13%

Federal Reserve Board Governor Christopher J. Waller and Vice Chair Michelle W. Bowman gave speeches emphasizing persistent inflation risks and the need for cautious monetary policy. These remarks contributed to market expectations of a potential rate hike later in 2026, increasing the probability of a 25 bps increase in September.

Market speculation rises on possible Fed rate hike amid inflation concerns

25 bps increase surges to 38%23%

Following hotter inflation data and hawkish Fed tone, markets increased expectations for a rate hike by September, reflecting uncertainty about inflation trajectory and Fed policy.

Federal Reserve Inflation Gauge Surges Above 4% in June 2026

25 bps increase surges to 59%21%

The Fed's preferred inflation measure, the PCE price index, rose to 4.1% in June, the highest since April 2023, signaling persistent inflationary pressures. This development increased market expectations for a rate hike later in 2026 to combat inflation.

Federal Reserve holds rates steady but signals hawkish outlook

25 bps increase jumps to 32%6%

At its June meeting, the Fed maintained the federal funds rate at 3.50%-3.75% but raised year-end rate projections and removed easing bias language, signaling a higher likelihood of rate hikes later in 2026. This hawkish pivot caused markets to reassess and price in increased odds of a 25 bps hike.

FOMC unanimously maintains federal funds rate at 3.50%-3.75% amid solid growth

No change drops to 71%5%

The Federal Reserve's Federal Open Market Committee voted unanimously to keep the target range steady, citing solid economic activity and elevated inflation. The statement noted uncertainties from geopolitical tensions but reaffirmed commitment to price stability, supporting market expectations for no immediate rate change.

New Fed Chair Kevin Warsh holds rates steady, ends forward guidance

No change dips to 73%2%

At the June FOMC meeting, new Chair Kevin Warsh maintained the federal funds rate at 3.50%-3.75% and stopped providing forward guidance, signaling a data-dependent approach. This increased market uncertainty but supported the no change outcome in the near term.

Federal Reserve Board Votes Unanimously to Maintain Interest Rate Paid on Reserve Balances

No change surges to 81%28%

The Federal Reserve Board of Governors unanimously maintained the interest rate paid on reserve balances at 3.65 percent effective June 18, 2026, supporting the FOMC's decision to hold the federal funds rate steady. This reinforced the Fed's cautious stance amid ongoing inflation and economic conditions.

Federal Reserve holds interest rates steady at 3.50%-3.75% in June FOMC meeting

No change jumps to 65%5%

The FOMC voted unanimously to maintain the federal funds rate target range, signaling a pause amid mixed economic signals and persistent inflation, supporting the no change outcome in the market.

Federal Reserve holds interest rates steady at 3.50%-3.75% amid persistent inflation

On June 17, 2026, the Federal Reserve decided unanimously to maintain the target federal funds rate range at 3.50%-3.75%, citing solid economic expansion despite ongoing inflation pressures. The updated dot plot indicated a hawkish pivot with expectations for rates to remain higher for longer, signaling fewer rate cuts and potential hikes later in the year.

Federal Reserve holds federal funds rate steady at 3.50%-3.75% in June meeting

The FOMC unanimously decided to maintain the target range for the federal funds rate at 3.50% to 3.75%, citing solid economic activity and stable labor market conditions despite elevated inflation and geopolitical uncertainty. This decision reinforced market expectations for no immediate rate changes.

Federal Reserve holds rates steady but signals hawkish outlook

At the June 16-17 FOMC meeting, the Fed kept the federal funds rate at 3.50%-3.75% but removed easing bias and raised year-end rate projections, signaling a higher likelihood of rate hikes later in 2026. This led markets to price in fewer cuts and more hikes, supporting the 'No change' and '25 bps increase' outcomes.

Federal Open Market Committee unanimously maintains federal funds rate at 3.50%-3.75%

No change drops to 69%5%

The FOMC voted 12-0 to keep the target range unchanged, removing language suggesting an easing bias and emphasizing the need to deliver price stability amid elevated inflation and economic uncertainty.

Federal Reserve maintains target federal funds rate at 3.50%-3.75% in June meeting

No change jumps to 65%5%

In the June FOMC meeting, the Fed under new Chair Kevin Warsh kept rates steady, emphasizing data-driven decisions and refraining from forward guidance, which contributed to market uncertainty but reinforced expectations of no immediate rate changes.

U.S. inflation rises to 4.2% in May, highest in three years

25 bps increase rises to 16%4%

Consumer prices surged 4.2% year-over-year in May, driven largely by energy price increases due to the Iran conflict, complicating the Fed's inflation outlook and increasing expectations for rate hikes. This inflation spike reinforced the Fed's cautious stance and hawkish projections in June.

US Consumer Price Index rises 4.2% in May, highest in three years

The May 2026 CPI report showed a 4.2% year-over-year increase, driven primarily by a 40% spike in gasoline prices, signaling persistent inflationary pressures. This data reinforced market expectations that the Federal Reserve would maintain or potentially raise interest rates to combat inflation.

U.S. Consumer Price Index for May 2026 shows inflation at 4.2%, highest in 3 years

25 bps increase surges to 39%23%

The May 2026 CPI report revealed a 4.2% year-over-year inflation rate, driven largely by energy price increases amid Middle East tensions, signaling persistent inflationary pressures that challenged expectations of rate cuts and supported a hawkish Fed outlook.

Reuters poll shows majority expect Fed to hold rates for rest of 2026

A Reuters poll of economists indicated a strong consensus that the Federal Reserve would keep interest rates steady through the remainder of 2026 due to persistent inflation and geopolitical risks, reinforcing market pricing for no change in September.

Economists largely expect Fed to hold rates steady for rest of 2026 amid persistent inflation

No change drops to 70%6%

A Reuters poll on June 9 showed a strong majority of economists forecasting no change in the federal funds rate for the remainder of 2026, reflecting concerns over persistent inflation and war-driven price pressures. This consensus supported the market's no change outcome probability.

Economists predict Fed will hold rates for rest of 2026 amid persistent inflation

A Reuters poll showed a strong majority of economists expect the Federal Reserve to keep interest rates steady through 2026 due to ongoing inflation pressures driven by war-related supply shocks and resilient economic indicators, reducing expectations for rate cuts this year.

Majority of economists expect Fed to hold rates for rest of 2026 amid persistent inflation

No change jumps to 57%7%

A Reuters poll showed that nearly 70% of economists forecast the Federal Reserve would keep its key interest rate unchanged through the rest of 2026, reflecting concerns over persistent inflation driven by geopolitical tensions and energy prices. This consensus marked a shift away from earlier expectations of rate cuts, reinforcing market pricing for a stable or higher rate environment.

May 2026 Nonfarm Payrolls report shows strong job growth of 172,000

25 bps increase jumps to 21%5%

The May 2026 jobs report exceeded expectations with 172,000 new jobs added, reinforcing the Fed's hawkish stance by demonstrating labor market resilience despite inflationary pressures, increasing the likelihood of rate hikes later in the year.

May 2026 jobs report shows strong employment growth with 172,000 jobs added

25 bps increase rises to 16%4%

The May 2026 jobs report revealed a stronger-than-expected labor market with 172,000 jobs added, reinforcing the Fed's hawkish stance due to resilient employment and supporting expectations of future rate hikes.

Fed officials signal possible future rate hikes amid inflation risks

Federal Reserve officials indicated readiness to raise interest rates if inflation pressures persist, especially due to geopolitical tensions in the Middle East. This hawkish tone increased market expectations for holding rates steady or hiking later in 2026, reducing the likelihood of cuts.

Federal Reserve officials signal possible future rate hikes amid inflation risks

25 bps increase jumps to 38%12%

On May 29, 2026, Federal Reserve officials indicated that rising inflation, partly due to the Middle East conflict, might necessitate future interest rate increases. This hawkish tone raised market expectations for a rate hike later in the year, impacting the probability of a 25 bps increase in September.

Fed officials signal possible rate hike amid rising inflation risks

25 bps increase jumps to 32%6%

Federal Reserve officials indicated that if inflation remains elevated, particularly due to the Middle East conflict, they may need to raise interest rates later in 2026. This hawkish tone increased market expectations for a potential rate hike, impacting the probability of a 25 bps increase.

Fed officials signal possible future rate hikes amid inflation risks

25 bps increase surges to 46%20%

Federal Reserve officials indicated readiness to raise interest rates if inflation persists, citing risks from the Middle East conflict and elevated inflation. This hawkish tone increased market expectations for a rate hike later in 2026, supporting the rise in probability for a 25 bps increase.

Fed officials signal readiness to raise rates if inflation persists amid Middle East tensions

25 bps increase surges to 38%22%

On May 29, 2026, Federal Reserve officials indicated that while there was no urgency to adjust rates immediately, they remained prepared to raise interest rates if inflation continued to rise due to geopolitical risks, influencing market expectations of potential future hikes.

Fed officials signal possible rate hikes amid inflation risks from Middle East conflict

No change surges to 74%21%

Federal Reserve officials indicated readiness to raise interest rates if inflation pressures from the Middle East conflict persist, increasing market expectations for tightening later in 2026. This hawkish tone contributed to a decline in probabilities for rate cuts and supported the 'No change' and '25 bps increase' outcomes.

Kevin Warsh sworn in as new US Fed chair

25 bps increase rises to 14%3%

Kevin Warsh officially took office as Federal Reserve Chair on May 22, 2026, beginning his leadership amid inflation pressures and political scrutiny, setting the stage for his first FOMC meeting and potential policy shifts.

Kevin Warsh confirmed as new Federal Reserve Chairman

25 bps increase drops to 17%9%

The Senate confirmed Kevin Warsh as the new Fed Chair on May 13, and his leadership was expected to mark a shift in monetary policy. This appointment influenced market expectations, as Warsh was seen as more hawkish compared to his predecessor, contributing to early price movements favoring a rate increase.

Kevin Warsh appointed as new Federal Reserve Chairman

No change dips to 74%2%

Kevin Warsh succeeded Jerome Powell as Fed Chair, signaling a shift towards data-driven policy without forward guidance. This increased market uncertainty about future rate moves, contributing to fluctuating expectations but overall supporting a cautious approach with no immediate rate changes.

Speech by Governor Waller highlights inflation concerns and market expectations

Governor Waller expressed concerns about rising inflation expectations, signaling vigilance on inflation risks which contributed to market anticipation of a possible rate increase.

Kevin Warsh sworn in as new Federal Reserve Chairman

No change surges to 81%28%

Kevin Warsh took over as Fed Chair, signaling a shift toward data-driven monetary policy without forward guidance, increasing market uncertainty about future rate moves.

Kevin Warsh sworn in as new Federal Reserve Chair at White House

Kevin Warsh was officially sworn in as the 17th Chair of the Federal Reserve, marking a leadership transition from Jerome Powell. His appointment introduced market uncertainty about future rate policy, as Warsh emphasized independence and reform but faced political pressures.

New Fed Chair Kevin Warsh signals data-driven approach, no immediate rate cuts

25 bps increase drops to 17%9%

Following his appointment in May 2026, Fed Chair Kevin Warsh emphasized a data-dependent monetary policy approach, avoiding forward guidance and indicating that rate cuts are unlikely soon given persistent inflation. This stance contributed to a decline in market expectations for rate decreases and a gradual increase in the probability of a 25 bps rate hike by September.

Fed Officials See Rate Hike Ahead if Inflation Remains Elevated

25 bps increase jumps to 38%12%

Minutes from the May 2026 meeting revealed that many Fed officials anticipated the need for interest rate increases if inflationary pressures, exacerbated by geopolitical tensions, persisted. This hawkish sentiment contributed to market pricing in a higher likelihood of rate hikes later in 2026, influencing the market's evolving expectations.

Fed Minutes Reveal Split Views on Inflation and Rate Cuts Amid Middle East Conflict

Minutes from the May 2026 FOMC meeting showed a divided committee with some participants advocating for rate cuts if inflation pressures eased and the Middle East conflict resolved, while others expressed concern about embedded inflation risks due to elevated energy prices and tariffs. This uncertainty contributed to market volatility and shifting rate hike probabilities.

Fed officials see rate hike ahead if inflation stays elevated, minutes show

No change surges to 81%28%

Minutes from the Fed's May meeting revealed that many officials anticipated the need for interest rate increases if inflation, exacerbated by the Iran war, remained high. This signaled a shift away from earlier expectations of rate cuts and contributed to market uncertainty.

Inflation rises to highest level in three years amid Iran conflict

25 bps increase drops to 12%14%

US inflation rose 4.2% year over year in May, the highest in three years, driven by energy price spikes and supply chain disruptions from the Iran war. This diminished hopes for rate cuts and increased the likelihood of rate hikes later in 2026.

Kevin Warsh confirmed as Federal Reserve Chair by Senate

25 bps increase plunges to 11%15%

Kevin Warsh's confirmation as Fed Chair introduced expectations of a hawkish monetary policy stance amid ongoing inflation challenges, influencing market pricing toward a potential rate hike later in 2026.

US inflation rises 4.2% year over year, highest in three years

No change plunges to 50%17%

Inflation data released in May showed a 4.2% increase year over year, the highest in three years, dampening hopes for rate cuts and supporting expectations that the Fed would maintain or raise rates to combat inflation.

Market anticipates Fed rate cut path in 2026 amid economic uncertainty

No change rises to 55%2%

Early in the analysis window, markets priced in a significant probability of rate cuts in 2026, reflecting uncertainty about inflation and economic growth. However, this sentiment shifted as inflation remained elevated and the Fed under new leadership signaled a more hawkish stance, reducing expectations for cuts and increasing the likelihood of hikes later in the year.

US inflation rises to 4.2% in May, highest in three years amid energy price shock

25 bps increase drops to 12%14%

US Consumer Price Index inflation accelerated to 4.2% year-over-year in May 2026, driven mainly by energy price shocks linked to Middle East conflicts. This surge diminished hopes for rate cuts and increased market expectations for a potential rate hike later in the year.

Federal Reserve maintains steady rates amid mixed economic signals

At the start of the analysis window, the Fed held rates steady as economic data showed mixed signals on inflation and growth. Market prices reflected uncertainty, with the 'No change' and '25 bps increase' options both holding significant probabilities.

Stronger-than-expected inflation report shifts market outlook away from rate cuts

25 bps increase jumps to 38%12%

A May inflation report showed a 4.2% annual CPI increase, the highest in three years, raising concerns about persistent inflation and reducing expectations for near-term Fed rate cuts. This led markets to price in a higher chance of a rate hike later in 2026.