Institution: Middle East conflict will dominate the U.S. interest rate path, with risk leaning towards no rate cuts

Golden Finance reported that on April 30, Max Stainton, a Senior Global Macro Strategist at Fidelity International, said in a report that for the remainder of this year, the outlook for U.S. interest rates will increasingly depend on how long the Middle East conflict continues. Fidelity’s baseline scenario remains slightly more dovish than what the market is pricing, and it expects the incoming Fed chair Wash and the committee as a whole to generally favor mitigating the damage that energy shocks will do to economic growth. However, as the risk of a prolonged closure of the Strait of Hormuz rises, it has become clearly evident that there is a risk of energy price shocks spreading into broader inflationary pressures and affecting the overall economy. “We still expect to see a rate cut this year, but the risks are clearly skewed toward no action for the entire year.” (Jin10)