Fed Rate Hike Odds Jump as Oil Prices Soar

The Federal Reserve's decision on interest rates this week has become increasingly uncertain as major brokerages weigh in.

Brent crude oil prices surged to $100 a barrel last week, fueling fears that policymakers may need to raise rates to control inflation, which consistently runs above the 2% target.

Most brokerages still expect the Fed to keep rates unchanged this year as their base case, but some are now predicting rate hikes in September. BofA and Deutsche Bank forecast three and two rate hikes, respectively.

BofA strategists said that Chair Kevin Warsh faces a difficult choice between raising rates to demonstrate inflation-fighting resolve or keeping them steady to maintain the Fed's credibility.