Despite Falling Oil Prices, There's Now a 73% Chance of an Interest Rate Hike by September -- Here Are the 2 Culprits to Blame

The probability of a Federal Reserve interest rate hike by September 16 has surged from 26% to 73% despite falling oil prices. Two main culprits are driving inflation: spillover effects from the Iran war into the broader economy through supply chain disruptions and higher production costs, and the AI infrastructure build-out causing GPU and memory/storage prices to skyrocket. Core PCE inflation reached 3.4% in May, the highest since October 2023, marking 63 consecutive readings above the Fed's 2% target.