world-economy

Fed Rate Hike Odds Surge as Oil Prices Spike on Iran Blockade

The probability of a Federal Reserve interest rate increase at its July meeting climbed sharply Monday, driven by geopolitical tensions and inflation concerns. CME's FedWatch tool now estimates a 46.5% chance of a 25 basis point hike on July 29. Prediction markets assess the odds at 36%, up from under 10% earlier this month. The shift follows President Donald Trump's reinstatement of a U.S. blockade on Iranian ports near the Strait of Hormuz and a 20% toll on cargo passing through the waterway. Oil prices surged more than 5%, crossing $75 per barrel. Federal Reserve Governor Christopher Waller warned the central bank must avoid 2021-2022 mistakes of delayed rate increases amid rising inflation, though cautioned against overcorrecting. June inflation data, expected Tuesday, may provide clarity on the Fed's path forward.