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

Odaily Planet Daily News: T. Rowe Price Chief U.S. Economist Blerina Uruci stated that the market may still be underestimating the likelihood of further policy tightening by the Federal Reserve. In a report, Uruci noted that since early May, the Iran conflict has persisted longer than expected, oil prices have risen, and U.S. 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 primary outlook to the federal funds rate remaining unchanged over the next 12 months. She estimates a 45% probability that the rate will stay the same, 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)