Global Markets React to Geopolitical Pause, Central Bank Policy Expectations Ahead of Fed Meeting

Global markets are consolidating with cautious optimism following a pause in US-Iran strikes, which contributed to a sharp decline in Brent crude prices below $90 per barrel and lowered euro area inflation expectations. While economists largely anticipate the Federal Reserve to maintain current interest rates at its upcoming meeting, markets are pricing in a roughly 33% chance of a rate hike, influenced by new Fed Chair Kevin Warsh's emphasis on controlling inflation. Concurrently, the European Central Bank is still expected to implement two more rate increases, with the first projected for September.