Bloomberg Surveillance · Monday, July 20, 2026
The market is pricing in potentially one rate hike, but recent data suggests disinflation. While the Fed has been reluctant to call inflation transitory due to past misses, current trends suggest it may be. The consensus is that the Federal Reserve is likely on hold regarding interest rates.
“So that's a great question. I think there's been so much focus on the inflation data, and last week we saw some softness finally of some deflation and disinflation and expectation that PCE is moving down in the direction closer to the Fed's target. On the other hand, the Fed inflation hasn't been at the FEDS target for the last five years, so the market still the Fed's been reluctant to call this bound of inflation transitory because they missed that last time. So that's a yeah, I hear you grumbling. That's a bad word, Tom. But so the Fed's been reluctant, but this actually does feel more transitory, and we think the Fed's on hold.”
“No, I don't think we get used to three and a half or four percent? But is it two or two and a half? Yeah, I think that's more likely.”