Analyst: Rising Tensions in Iran Could Disrupt the Federal Reserve's Rate Cut Plans

BlockBeats reports that on June 16, the Federal Reserve is expected to maintain the current interest rate levels unchanged in its latest policy decision this week.

The market's focus will be on whether the Fed signals any indication of the timing for future rate cuts. Recently released CPI and PPI data came in weaker than expected, prompting market participants to bring forward their expectations for the next rate cut. The money markets have already priced in a high probability of a rate cut by October this year, with some chances of action as early as September. Previously, the prevailing market expectation was for a rate cut to occur in December.

Citi analysts pointed out that the market may be underestimating the risk of rate cuts. However, U.S. tariff hikes could push inflation higher, and if the tensions between the U.S. and Iran escalate further, causing oil prices to rise, this could further delay the Fed's rate-cutting timeline. Allianz analysts noted that in the context of elevated inflation, the Federal Reserve is unlikely to hastily loosen monetary policy. (Jin10)