Brokerages See July Fed Decision as 'Close Call' Amid Oil Price Surge

A growing number of brokerages are seeing this week's Federal Reserve decision as a close call. The July meeting comes after a surge in oil prices and escalating tensions in the Middle East.

Brent crude hit $100 a barrel last week, causing concerns that policymakers will need to raise rates more aggressively to control inflation. Inflation has consistently run above the Fed's 2% annual target.

Major brokerages like BofA Global Research and Deutsche Bank still expect the Fed to keep rates unchanged this year as their base case. However, they are forecasting rate hikes starting in September. BofA predicts three rate hikes, while Deutsche Bank expects two.

UBS Global Research strategists agree that a rate hike could be on the table, citing the need for the Fed to demonstrate its inflation-fighting resolve. They add that Federal Reserve Chair Kevin Warsh's influence would likely be a deciding factor.