Oil Price Surpasses 110 US Dollars, Strengthening Prospects for Fed Interest Rate Hike

NEW YORK – Mounting global inflationary pressures, driven by surges in energy prices and import costs, are leading market participants to consider the possibility of a policy direction change in interest rates by the United States Federal Reserve (The Fed). Citing CNBC on Saturday (28/3/2026), the latest data indicates that market expectations for an interest rate hike are strengthening. Market participants in futures instruments have even pushed the probability of a Fed Fund Rate (FFR) increase by the end of 2026 to 52 per cent on Friday morning (27/3/2026) local time. This shift in expectations is occurring amid a surge in global crude oil prices that has surpassed 110 US dollars per barrel. The rise in energy prices is one of the factors strengthening inflationary pressures, particularly as the Iran conflict drags on and US tariff policies increase import costs. Inflationary pressures are also reflected in official US government data. The Bureau of Labor Statistics reported that import prices rose 1.3 per cent in February 2026, the largest monthly increase since March 2022. At the same time, the Organisation for Economic Co-operation and Development has revised its US inflation projections upwards. The organisation now forecasts headline inflation to reach 4.2 per cent this year, well above previous projections and exceeding The Fed’s expectations of 2.7 per cent. This situation strengthens market concerns over stagflation risks, a scenario where high inflation coincides with economic slowdown. Moody’s Analytics estimates the chance of recession nearing 50 per cent. Meanwhile, Goldman Sachs has raised its projection to 30 per cent. Several other institutions, such as EY Parthenon and Wilmington Trust, also place the recession probability at 40 per cent or higher. This situation places The Fed’s dual mandate – keeping inflation low and achieving maximum employment – in an increasingly difficult position.