Fed rate hike in 2026?

What's driving it

• • A surge in oil prices has increased inflation expectations, leading investors to boost bets on a rate rise (Financial Times, Jul 25).
• • Fed Chair Kevin Warsh testified on July 14 that inflation remains too high, but a same-day inflation report caused market odds of a July hike to drop from 42% to 16%, creating confusion about the Fed's next move (The Motley Fool, Jul 26).
• • The upcoming Fed meeting is described as a 'family feud' with Warsh deliberately keeping markets in the dark, amplifying uncertainty and volatility in rate expectations (Fortune, Jul 25; MarketWatch, Jul 25).
• • A chief economist argues a surprise rate hike could come at next week's meeting, contradicting the majority of economists who still call for a cut (Business Insider, Jul 24; Bloomberg, Jul 24).

What to watch

• • The Fed's policy decision and press conference on July 29-30, 2026 — a hike would push odds to near 100%, while a hold or cut would drop them sharply.
• • Any new inflation data (e.g., CPI or PCE release) before year-end that shows a sustained rise would increase odds of a hike; a decline would reduce them.
• • Oil price movements in the coming weeks — a continued surge would strengthen the case for a hike, while a sharp drop would weaken it.