T. Rowe Price chief U.S. economist Blerina Uruci says markets may still be
underestimating the risk of further Fed tightening. Since early May the Iran
conflict has persisted longer than expected, pushing oil higher while U.S.
growth remains resilient. Uruci notes the Fed can look through a temporary
energy shock, but sustained oil and import-price pressure could lift inflation
expectations, alter wage dynamics and corporate pricing, increasing the case for
tighter policy. Her base case is the federal funds rate remains unchanged over
the next 12 months; she assigns a 45% probability to unchanged, 35% to a hike by
year-end or early 2027, and 20% to a cut.
