This Week in the Economy

The Fed held rates steady — then signaled the next move is more likely up than down, and the market listened.

Two forces pulled rates in opposite directions this week. On the inflation side, the news was good: a U.S.-Iran agreement to reopen the Strait of Hormuz, halt the fighting, and begin a 60-day negotiation eased fears of an energy spike, and oil fell to multi-month lows — a disinflationary relief valve after months of Middle East risk.

The Federal Reserve leaned the other way. At Chair Kevin Warsh’s first meeting on June 17, the Fed held its benchmark rate at 3.50–3.75% but turned distinctly hawkish: the “dot plot” flipped from an expected cut to projecting a hike, and 17 of 18 officials now see inflation risks tilted upward. Markets repriced toward a possible September hike, short-term yields climbed, and mortgage rates ticked back up this week after easing the week before.