Opinion: Market still underestimates potential tightening policies of the Fed

OdailyOdaily reported that T. Rowe Price Chief US Economist Blerina Uruci said the market may still be underestimating the possibility of further tightening by the Federal Reserve. In a report, Uruci noted that since early May, the conflict with Iran has lasted longer than expected, oil prices have risen, and US economic growth has remained resilient. While the Fed can ignore temporary energy shocks, sustained pressure from oil and import prices could impact inflation expectations, wage dynamics, and corporate pricing behavior.

Uruci shifted her main outlook to the federal funds rate remaining unchanged over the next 12 months. She estimates a 45% probability of rates staying unchanged, a 35% probability of a rate hike by the end of the year or early 2027, and a 20% probability of a rate cut. (Jinshi)