Today, the international crude oil market is most concerned about the meeting of the federal reserve on July 25. On July 21st bernanke, chairman of the federal reserve, said: “the fed will raise interest rates for 25 basis points in the next meeting, which may be the last time in July.” In fact, this is in line with market expectations, and the probability of a 25 basis point increase in interest rates has risen to 99.6%, largely a link to the nail.

A list of Fed rate hike progress

Since March 2022, the Federal Reserve has raised interest rates 10 times in a row has accumulated 500 points, and from June to November last year, four consecutive aggressive interest rate increases of 75 basis points, during this period, the dollar index rose 9%, while WTI crude oil prices fell 10.5%. This year’s rate hike strategy is relatively modest, as of July 20, the dollar index 100.78, down 3.58% from the beginning of the year, has been lower than the level before last year’s aggressive rate hike. From the perspective of the weekly performance of the dollar index, the trend has strengthened in the past two days to regain 100+.

In terms of inflation data, the cpi fell to 3%in June, the 11th decline in March, the lowest since March 2021. It has fallen from a high 9.1% to a more desirable state last year, and the fed’s continued tightening of monetary policy has indeed cooled the overheating economy, which is why the market has repeatedly speculated that the fed will soon stop raising interest rates.

The core PCE price index, which strips out food and energy costs, is the Fed’s favorite inflation measure because Fed officials see the core PCE as more representative of underlying trends. The core PCE price index in the United States recorded an annual rate of 4.6 percent in May, still at a very high level, and the growth rate was the highest since January this year. The Fed still faces four challenges: a low starting point for the first rate hike, looser financial conditions than expected, the size of fiscal stimulus, and changes in spending and consumption due to the pandemic. And the job market is still overheated, and the Fed will want to see the supply-demand balance in the job market improve before declaring victory in the fight against inflation. So that’s one reason why the Fed hasn’t stopped raising rates for now.

Now that the risk of a recession in the United States has dropped significantly, the market expects the recession to be mild, and the market is allocating assets for a soft landing. The Federal Reserve’s interest rate meeting on July 26 will continue to focus on the current probability of a 25 basis point rate hike, which will boost the dollar index and restrain oil prices.