BNY Mellon: The Federal Reserve is expected to raise interest rates again in December.

John Velis, a macro strategist for the Americas at BNY Mellon, stated in a report that the Federal Reserve is expected to raise interest rates once more in December, but he is not so certain whether the Fed can implement as many hikes in 2027 as currently priced in by the market. "The answer depends on how effective tightening policy can be amid the current inflation shock," he said. Much of this hinges on the situation in the Middle East, where visibility remains low. "Easing tensions and the resulting fall in oil prices could alter the market's and the Fed's considerations." However, he added that tying the policy outlook to a situation that could first deteriorate and then improve is not a long-term solution.