Fed Rate Hike Now Seen as 'Close Call' Amid Oil Price Surge

Major brokerages are now taking the July Federal Reserve decision more seriously than before due to recent developments in the global economy. Brent crude oil prices hit a record $100 a barrel last week, sparking fears that inflation may surge beyond the Fed's two percent annual target.

This has led some brokerages, including BofA Global Research and Deutsche Bank, to revise their expectations and predict a rate hike starting as early as September. They cite the re-escalation of conflict in the Middle East and rising oil prices as key factors contributing to this change in sentiment.

However, not all brokerages share this view. Citigroup, a long-standing Fed dove, argues that a credibility-driven rate hike would be difficult to justify given market-based inflation expectations have fallen to low levels.