The market currently believes that there is zero possibility of the Federal Reserve lowering interest rates this year.

Due to the escalating conflict in the Middle East expected to raise inflation, the financial markets have completely abandoned their bets on a rate cut by the Federal Reserve this year. According to CME Group data, the derivatives market now sees zero probability of a rate cut this year, compared to 1.3% on Thursday. The market currently predicts a 54% chance of at least one rate hike. The energy price shock triggered by this conflict has drastically altered the outlook for central banks around the world, as they now face the dual challenge of rising inflation and slowing growth. With disruptions in the energy market intensifying, the risk of inflation pressures spreading into broader price pressures is also increasing. Just a month ago, before the conflict erupted, investors were betting on two to three rate cuts this year. However, in last week's Fed meeting, most officials were still expecting a 25 basis point rate cut this year.