Institutions: The Federal Reserve has opened the window for a July interest rate hike, and delaying the hike until September could face risks of political criticism.

James Ragan, co-chief investment officer and director of investment management and research at investment bank D.A. Davidson, noted that since the Federal Reserve’s last meeting, inflation data has been moderate and employment growth has been modest, but the escalation of U.S.-Iran military conflicts in July has disrupted these positive trends. This means the overall inflation progress made in June could reverse, and the Fed must assess whether core inflation trends are more persistent. If the Fed determines that higher inflation expectations are forming, it should raise interest rates in July rather than waiting until September—especially given this year’s upcoming midterm elections, where action at that time could draw political criticism. According to CME’s FedWatch Tool, the probability that the Fed will hold rates steady in July stands at 69.5%, while the chance of a 25-basis-point rate hike is 30.5%.