The Federal Reserve concludes its two-day FOMC meeting on July 29 and is widely expected to hold the federal funds rate steady at 3.50%-3.75%. The probability of a rate hike had climbed to 46.5% in mid-July before subsiding following June’s core CPI of 2.6% year-over-year, slightly above the Fed’s 2% target. Fed Chair Kevin Warsh faces internal divisions over the possibility of future rate increases. Higher interest rates strengthen the US dollar and make borrowing more expensive, pulling capital away from speculative assets toward safer instruments. Oil prices remain the key wildcard that could shift the monetary policy outlook at upcoming meetings.
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