Economists Predict Fed Rate Hold Amid Middle East Conflict

Economists surveyed by Reuters anticipate that the Federal Reserve will maintain interest rates unchanged until September. According to Jin10, despite ongoing concerns about inflation driven by the Middle East conflict, these economists still foresee at least one rate cut later this year. In contrast, financial markets have dismissed the possibility of a rate cut this year, estimating a nearly 30% chance of a rate hike. The ongoing conflict between Israel and Iran, now in its fourth week, has led to a more than 40% increase in crude oil prices. Economists expect the impact of this energy shock to be limited and short-lived. The Reuters survey reveals a significant divergence in economists' predictions regarding interest rates by the end of 2026. The forecasts fall into four categories: 28 economists predict one rate cut, 37 foresee two cuts, 13 expect rates to remain unchanged, and 4 anticipate three rate cuts.