Opinion: The market may still be underestimating the potential for tightening policy by the Federal Reserve

Odaily Planet Daily News: T. Rowe Price Chief US Economist Blerina Uruci stated that the market may still be underestimating the possibility of the Fed further tightening its policy. Uruci said in a report that since early May, the conflict in 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 affect inflation expectations, wage dynamics, and corporate pricing behavior.

Uruci has shifted her main view to the federal funds rate remaining unchanged over the next 12 months. She estimates a 45% probability of the rate remaining 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. (Jin Shi)