Fed Rate Hike Chances Rise to 32% Amid Oil Price Surge

The Federal Reserve's July rate decision has become increasingly uncertain due to rising oil prices and escalating tensions in the Middle East. Major brokerages such as BofA Global Research and Deutsche Bank are now considering a possible rate hike, despite their base case of keeping rates unchanged this year.

Brent crude hit $100 a barrel last week, fueling concerns that policymakers will need to be more aggressive in raising rates to control inflation. Strategists at BofA noted that Chair Kevin Warsh faces a difficult choice between hiking rates and maintaining the Fed's credibility on inflation.

Most brokerages expect the Fed to keep rates unchanged this year, but some, including UBS Global Research, are predicting rate hikes starting in September. Citigroup, however, argues that a credibility-driven rate hike would be difficult to justify, given low market-based inflation expectations.