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July 24, 2026 / 6:00 AM EDT
/ CBS News
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The Federal Reserve is expected to leave interest rates unchanged at its July meeting next week, but rising oil prices have prompted investors to sharply increase their bets that a fresh rate hike could come later this year.At the start of the year, many economists expected at least one rate cut in 2026. But resurgent inflation tied to rising energy prices has prompted some forecasters to instead expect higher rates before year's end.Fed Chair Kevin Warsh has pledged to return inflation to the Fed's 2% target while offering few clues about his outlook. At the Fed's June meeting, Warsh declined to submit individual economic projections, although nearly half of policymakers said they would support a rate hike later this year.Oil prices have surged in recent weeks, topping $100 a barrel on Thursday, suggesting that inflation may remain a stubborn issue in the near term, experts say."The Fed will find holding steady a harder case to make than it looked even a few weeks ago," noted Nigel Green, the CEO of the investment firm deVere Group, in a July 23 email. The probability of a rate hike at Wednesday's meeting has been rising, according to the CME Group's FedWatch, which uses 30-day Fed funds futures prices to predict rate cut decisions. The tool now shows a 38% likelihood the central bank will hike its benchmark rate next week, up from 12% a week earlier. Still, the greater likelihood is that the Fed will hold its benchmark rate steady in a target range of 3.5% to 3.75%, the CME FedWatch predicts.
