Fed Meeting Clouded by Inflation and Middle East Tensions

The Federal Reserve's upcoming meeting on July 28-29 has been shrouded in uncertainty due to various factors, including slowing annual inflation and rising tensions in the Middle East.

According to recent data, US inflation slowed down in June with a drop in energy costs, which reduced pressure for an interest rate hike at the Federal Reserve's meeting next week. However, renewed escalation of tensions in the Middle East and rising oil prices brought energy costs back to the forefront as a major risk factor.

Markets expect the Fed to keep its policy rate steady at the upcoming meeting, but there is a 35.8% probability of a rate hike due to rising energy prices and inflation remaining above target.