War with Iran Boosts Odds of US Rate Hike This Week

The probability of a US interest rate hike this week surged to 38% amid rising oil prices following the escalation of the war with Iran, according to CME Group data. The shift reflects pressure on Fed Chair Kevin Warsh to act against renewed inflation.

The probability of a US interest rate hike this week surged to 38%, up from 13% last week, according to CME Group data based on federal funds futures. The jump stems from the escalation of the war with Iran, which pushed crude oil prices above $100 per barrel on Thursday for the first time since May. US President Donald Trump threatened a "massive attack" against Iran, sparking inflationary concerns and putting pressure on Fed Chair Kevin Warsh to show readiness to act. Warsh told Congress he would have "zero tolerance" for high inflation but refrained from revealing explicit plans. Oil prices eased slightly to $91 after Trump backed down, but uncertainty remains high. Economist Robert Sockin of PGIM described the decision as "almost 50-50." Trading volumes in futures are 50% higher than in July 2025, indicating heightened market uncertainty.