Markets price a more than one-in-three chance of a US rate increase at Wednesday's meeting

The two day meeting of the Federal Open Market Committee, which began on Tuesday, 28 July 2026 (6 Mordad 1405), concludes on Wednesday, 29 July, with the announcement of its interest rate decision. As of Tuesday morning, the latest market pricing put the probability of an increase in the policy rate at that meeting at more than one third, a level of uncertainty this close to a meeting that has been unusual in recent years. The US policy rate was last recorded at 3.75 percent.

Citadel Securities has said it expects the Federal Reserve to raise rates this week in order to reinforce the credibility of the central bank's chair, Kevin Warsh, in fighting inflation. In prepared remarks for his Semiannual Monetary Policy Report to Congress, Warsh said policymakers remain fully committed to restoring price stability and have no tolerance for persistently elevated inflation. He added that the US economy continues to expand at a solid pace, that household consumption is growing at a moderate rate and manufacturing output has risen steadily this year, and he described business investment as the economy's most notable strength, driven largely by the construction of data centres and robust demand for AI related equipment and software.

The dollar index traded around 101.5 on Tuesday, holding the previous session's gains. The direction of US interest rates reaches Iran's markets through two channels: a higher rate typically raises the cost of holding a non yielding asset such as gold and weighs on the global ounce, while a stronger dollar affects the pricing of dollar denominated commodities including oil.