Fed Rate Hike Chances Rise Amid Oil Price Spike and Middle East Tensions

A growing number of major brokerages are now viewing the upcoming July Federal Reserve decision as a 'close call' due to the recent surge in oil prices and escalating tensions in the Middle East.

Brent crude hit $100 a barrel last week, fueling fears that policymakers will need to be more aggressive in raising interest rates to control inflation, which consistently runs above the Fed's 2% annual target.

While most brokerages still expect the Fed to keep rates unchanged, several major institutions, including BofA Global Research and Deutsche Bank, are forecasting rate hikes starting in September.

BofA strategists noted that the spike in oil prices has made the July rate decision a close call for Fed Chair Kevin Warsh, who faces a difficult choice between keeping rates low to boost economic growth or raising them to combat inflation.