Bloomberg Surveillance · Friday, July 24, 2026
Jim Caron believes the Federal Reserve is unlikely to hike rates this year, especially in the face of supply-side shocks like rising oil prices. He argues that monetary policy is designed for demand-driven overheating, and hiking rates into a supply-driven headwind would be counterproductive.
“Yeah, that's a really good question, I'm going to say that it's actually going to impact things in a negative way. And the reason I'm going to say that is, you know, number one, I don't think that the FED is going to hike rates you know, this year.”
“But the other issue here is that this is a supply side shock. The Fed's tools monetary policy is there when the economy is overheating because of demand side issues you know, that are taking place, you know, higher wages, you know, rampant hiring, a lot of spending, things like that.”
“When you have an oil or an energy you know shock that's coming through. A rate hike is basically just saying we're going to hike into something that's going to slow the market in the future. Higher oil prices is a headwind to the market. Why would you hike into a headwind into the market. It doesn't to me, that doesn't make a lot of sense.”