The Probability of a July Fed Rate Hike Has Tripled Over the Last Week -- Here's Why

The probability of a Federal Reserve rate hike at the July 28-29 FOMC meeting has surged from 10.7% to 34.7% in one week, driven by three factors: deteriorating U.S.-Iran peace talks threatening oil supplies through the Strait of Hormuz, persistent broad-based inflation with Core PCE at 3.4% (highest since October 2023), and inflationary pressures from AI data center buildouts. A rate hike could threaten the stock market's AI-driven rally, as higher borrowing costs may slow the debt-financed AI infrastructure expansion.