• Fed funds futures on CME show a 99.5% probability the Fed holds rates at 3.50%-3.75% at the April 29 FOMC meeting.
• WTI crude topping $110 per barrel after Trump’s April speech pushed Polymarket’s 0-cuts odds to 36% for all of 2026.
• The next major test arrives June 17, when markets price a 96.7% chance the Fed keeps borrowing costs unchanged again.

As of this weekend, Fed funds futures tracked by the CME Fedwatch Tool now show a 99.5% probability that the Federal Open Market Committee (FOMC) holds the benchmark rate at 3.50%-3.75% at its April 29 meeting. One month ago, on March 4, traders assigned only an 88.2% chance of a hold, with nearly 12% still banking on a cut to 325-350 basis points. That window has closed.

The shift followed President Donald Trump‘s prime-time national address this week, where he vowed to strike Iran “extremely hard” over the coming weeks, threatened to bomb power plants, and downplayed U.S. reliance on the Strait of Hormuz oil. Markets responded immediately. WTI crude crossed $110-$112 per barrel and Brent settled above $107, levels not seen consistently since the 2022 Russia-Ukraine shock.

Image source: CME Fedwatch tool.

Physical oil premiums in Houston climbed to $5.50 above futures. The Strait of Hormuz, through which roughly 20% of global oil supply moves daily, has seen Iranian naval actions nearly halt tanker traffic since fighting escalated in late February 2026. The International Energy Agency coordinated emergency stock releases across more than 30 countries, which have buffered but not eliminated shortages.

Those supply losses flow directly into the Fed’s preferred inflation gauge. The March 18 Summary of Economic Projections revised 2026 PCE inflation to 2.7%, up from the 2.4% estimate issued in December. Core PCE landed at the same level. The Fed’s median dot still pencils in one 25-basis-point cut this year, but Chair Jerome Powell made clear at the post-meeting press conference that officials need more time to assess whether second-round effects, wage-price spirals, and de-anchored expectations materialize.

Governor Stephen Miran cast the lone dissent at the March 17-18 meeting, voting for an immediate cut. The other 10 voting members held.

Prediction markets are more direct. Polymarket currently assigns a 36% probability to zero rate cuts in all of 2026, up from 10% before the war began. A single 25-basis-point cut draws 23% odds. Kalshi puts the no-cut scenario at 38.5%, with $2.9 million in trading volume reflecting real-money conviction.

Image source: Kalshi.

For the June 17 FOMC meeting, CME Fedwatch shows a 96.7% probability of another hold. On March 4, that figure sat at 66.8%, with 30.2% of traders still expecting a cut by June. That easing premium has almost entirely vanished.

Wall Street desks remain more optimistic than futures markets. Citi, for example, still forecasts more than 75 basis points in cuts for the year. But by February, Citi postponed it’s prediction. That split matters. Professional forecasters are weighing a scenario where the conflict de-escalates, and oil retreats; futures traders are pricing the world as it exists today.

Powell has framed the oil shock alongside prior supply disruptions, the pandemic, tariffs, and called Middle East developments “uncertain.” The Fed will not move until it has cleaner data. Upcoming inflation readings before and after the shock, along with the April jobs report, will draw close scrutiny. Still, the deck is being reshuffled, and Powell’s tenure as Federal Reserve Chair concludes on May 15, 2026.

Donald Trump has put forward Kevin Warsh as the next Chair, though Powell’s separate term as a Federal Reserve Governor runs through Jan. 31, 2028. From that vantage point, his position carries less weight; as one of seven governors through 2028, Powell holds a single vote and lacks the authority to guide outcomes in the manner of the Chair. Historical precedent indicates that departing Chairs seldom maintain meaningful influence once seated as a Governor.

In the meantime, per usual, American consumers are absorbing the arithmetic. The national gas price average is approaching or exceeding $4 per gallon in a myriad of states, up roughly $1 since before the war. The average 30-year mortgage rate sits near 6.38%. Borrowing costs across the economy are staying elevated because the Fed has no room to ease without risking a second inflation wave. One that may arrive whether policymakers intend it or not.

The next FOMC decision lands on April 29. Barring a dramatic reversal in oil prices or a ceasefire that credibly holds, the Fed is expected to do what markets have already priced: nothing.

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