<div id="readability-page-1"><span></span><div id="ArticleBody-InlineImage-108239092"><div><div><p>Renovation work continues on the Marriner S. Eccles Federal Reserve Board Building, the main offices of the Board of Governors of the Federal Reserve System on December 9, 2025 in Washington, DC.</p><p>Andrew Harnik | Getty Images</p></div></div></div><div><p>The Federal Reserve is still expected by futures traders and prediction markets to maintain the status quo at its July meeting, leaving interest rates unchanged once again. However, it's going to be a close call.</p><p>The odds are rising Monday that the central bank makes a move to hike.</p><p>There's now a 46.5% chance that the Fed hikes interest rates by a quarter point on July 29, according to CME's FedWatch tool. That's up from 34% on Sunday. </p><p>On prediction market platform Kalshi, traders now see a 36% chance of a hike, up from under 20% on Sunday and under 10% earlier this month. </p><p>The rise in odds comes after President Donald Trump announced he is reinstating the U.S. blockade of Iranian ports near the Strait of Hormuz, and imposing a 20% toll on all cargo through the passageway. </p></div><div><p><span id="RegularArticle-QuoteInBody-4">U.S. Oil prices<span><span id="-WatchlistDropdown"></span></span></span> rose in response on Tuesday, jumping more than 5% and crossing $75 per barrel. </p><p>Chances on Kalshi also jumped after Federal Reserve Governor Christopher Waller said the bank must not repeat the mistakes of 2021 and 2022, where he said the Fed waited too long to raise rates amid rising inflation. He added, though, that the bank shouldn't overcorrect and raise rates too quickly. </p><p>Odds of a hike are rising even as June inflation was expected to have cooled a bit. Economists surveyed by Dow Jones expect that inflation rose 3.8% annually in June, which is down from the rate in May of 4.2%. The Consumer Price Index report for June will be delivered on Tuesday. </p><p>But the inflation outlook could become more complicated if oil prices march higher again as the conflict in the strait resumes. And a Barclays note on Monday made the case that inflation concerns are now beyond solely energy prices. </p></div><div><div>Stock chart icon<p><img src="https://imageproxy.pbkrs.com/https://static-redesign.cnbcfm.com/dist/a54b41835a8b60db28c2.svg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://static-redesign.cnbcfm.com/dist/a54b41835a8b60db28c2.svg"/></p></div><p>WTI Crude 5-day chart. </p></div><div><p>Barclays global chairman of research Ajay Rajadhyaksha said that the pass-through of higher prices from the oil shock still isn't over, and that the lack of demand destruction from elevated energy prices has only exacerbated the inflation from it. He added that AI-induced price hikes are also deteriorating the inflation outlook. </p><p>All of this combines to create a situation for the Fed where it may have to turn increasingly hawkish, Rajadhyaksha wrote. </p><p>&#34;A data-dependent framework means you respond to inflation prints, as well as forecasts,&#34; he wrote. &#34;And the prints, for the next few months, are not going to look good.&#34;</p><p>The Federal Reserve will announce its next decision on interest rates on July 29. </p><p><em>Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.</em></p></div><div><p>Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.</p></div></div>

BARC

<p>Odds of a Federal Reserve rate hike in July are rising, reaching 46.5% on CME FedWatch and 36% on Kalshi, driven by surging oil prices following US actions in the Strait of Hormuz and hawkish comments from Governor Christopher Waller. Despite expected June inflation cooling to 3.8%, Barclays warns that energy shocks and AI-related price hikes complicate the outlook, potentially forcing the Fed to adopt a more aggressive stance before its July 29 decision.</p>

- On July 29, the Federal Reserve is expected to maintain interest rates, though the decision is becoming increasingly tense.  
- The likelihood of a 25 basis point rate hike has risen to 46.5%, influenced by geopolitical tensions and potential inflation from rising oil prices.  
- Concerns about inflation could prompt the Fed to adopt a more hawkish stance, with future data expected to reflect ongoing economic challenges.

A July rate hike from the Fed? The odds are rising