View: Market Still Underestimates Potential Fed Tightening

Odaily Planet Daily News T. Rowe Price Chief US Economist Blerina Uruci stated that the market may still be underestimating the possibility of further tightening by the Federal Reserve. In a report, Uruci noted that since the beginning of May, the conflict in Iran has lasted longer than expected, oil prices have risen, and US economic growth has remained resilient. Although 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 primary view to the federal funds rate remaining unchanged over the next 12 months. She estimates a 45% probability that the rate will remain 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)