BlockBeats News, July 27th, President Trump's plan to push for interest rate cuts faces another challenge. Wall Street analysts generally expect that the Federal Reserve's Federal Open Market Committee (FOMC) meeting held this week may keep rates unchanged, and there is even a possibility of a rate hike, with Trump's Middle East policy becoming a key factor influencing rate decisions.

The FOMC will hold a meeting this Tuesday and Wednesday to assess progress on the employment market and inflation target. Currently, the US inflation rate is around 3.5%, slightly down from May to June, but still well above the Fed's 2% target.

Reports indicate that the rise in energy prices is one of the key drivers of inflation. Currently, fuel prices are up 15.7% from the same period last year. Despite a 4.9% decrease from May to June, due to the ongoing impact of the Middle East conflict on global oil supply, energy prices remain high.

Wall Street believes that the Trump administration's military and diplomatic actions in the Middle East are constraining the Fed's room for interest rate cuts. With no formal ceasefire agreement reached between the US and Iran yet, the issue of control over the Strait of Hormuz remains uncertain, making it difficult for oil prices and inflation risks to fully dissipate.

Aditya Bhave, Chief US Economist at Bank of America, said the market is currently pricing in a rate hike of about 10 basis points in July. Fed Chair Kevin Wash faces a tough choice: not raising rates could affect the Fed's credibility in combating inflation, while raising rates could conflict with its previous policy framework of observing supply shocks.

Bank of America expects the Fed to keep rates unchanged in July, but still anticipates rate hikes of 25 basis points in September, October, and December this year.

The market is also watching Wash's policy independence after taking office. Analysts believe that if the Fed avoids necessary rate hikes due to political pressure, it could also damage its credibility.

According to the CME FedWatch tool data, about 68.5% of rate traders currently expect the Fed to keep rates unchanged this week, while the remaining market participants expect a 25 basis point hike to the 3.75%-4% range.