Warsh Faces Divided Fed as Rate Hike Chances Rise

The Federal Reserve's upcoming meeting on July 28-29 is expected to be a significant event for the markets, despite a lack of expectation for an interest rate hike. Chairman Kevin Warsh is unlikely to oversee a rate increase due to his personal views and concerns about undermining the outcomes of his task forces.

Warsh faces opposition from within the Federal Open Market Committee (FOMC), with approximately three or four members out of twelve voting members prepared to call for immediate rate increases. Investors see a nearly 40% chance of a rate hike, but many believe it would be a single increase that signals more moves are coming.

The bar for a rate hike is higher than reflected in rate futures markets due to recent inflation data and the easing of tensions between the US and Iran. Additionally, markets will view a single increase as indicative of further action from the Fed.