Expected Hawkish Helps Explain Falling Inflation Expectations

Dow Jones06-26

1210 ET - An apparent discrepancy in markets pricing of future inflation and interest rates could be deceiving, Northlight's Chris Zaccarelli says. War-related energy inflation and a recent hawkish pivot by the Fed have let fed funds futures to price in at least one hike this year. But oil prices have fallen sharply recently. Meanwhile, the completely different swap market prices inflation near the Fed's 2% target in the one-year horizon. "Both markets can be correct," Zaccarelli says, as "some members of the Fed may want to raise rates in the hopes of causing the inflation rate to drop." He expects the Fed to remain on hold instead of hiking, though. (paulo.trevisani@wsj.com; @ptrevisani)

(END) Dow Jones Newswires

June 25, 2026 12:10 ET (16:10 GMT)

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