Markets Price Fed Hike Despite Cooling Inflation Expectations

Dow Jones06-25 23:14

1114 ET - Inflation expectations fall near the Fed target, but markets seem reluctant to unwind bets on rising interest rates. The one-year inflation-linked swap rate is just above the Fed's 2% target, indicating investors believe inflation will soon cool down. Falling oil prices should help, as should an interest-rate increase. Futures markets price in at least one rate increase this year, with high odds rates will stay elevated into 2027. Rate hikes "appear even more out of step with economic reality after this morning's data," Citi's Andrew Hollenhorst and Veronica Clark write. They expect the Fed's next move to be a cut. (paulo.trevisani@wsj.com; @ptrevisani)

 

(END) Dow Jones Newswires

June 25, 2026 11:14 ET (15:14 GMT)

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