Against the backdrop of rising oil prices driven by tensions in the Middle East, market expectations for the Federal Reserve's policy path have shifted subtly. Although investors have begun betting on the possibility of the Fed raising interest rates, most economists and policymakers still believe the likelihood of a rate hike in the near term remains low. Data shows that, as of March 19, the probability of an April rate hike implied by federal funds rate futures has risen to 6% and has remained in positive territory. This marks the first time since December 2023 that the market has viewed the chance of a rate hike at the next meeting as higher than that of a rate cut. However, analysts generally believe this shift reflects market uncertainty stemming from geopolitical shocks and rising oil prices, rather than an imminent policy change. Citi economists pointed out that while surging oil prices pose a new inflation risk, they could also slow economic growth and put pressure on employment. From a policy perspective, Fed officials remain cautious overall. In the latest economic projections, none of the 19 policymakers anticipated a rate hike this year, with most leaning toward further rate cuts instead. Fed Chair Jerome Powell also stated that although the possibility of a rate hike was discussed during the meeting, the vast majority of officials did not view it as the baseline scenario. Officials also emphasized that the inflationary impact of an oil price shock is likely to be temporary, while monetary policy adjustments typically take a long time to affect the economy. This suggests that if the Fed were to raise rates hastily, the restraining effects might only materialize after inflationary pressures had already eased. Analysts note that a rate hike would only be justified if energy prices remained elevated and spread to a broader range of goods and services, while the labor market showed significant strength and wage pressures increased. However, current conditions do not meet these criteria. In fact, the Fed remains cautious in its assessment of the labor market. Official forecasts indicate that the unemployment rate may remain around 4.4% this year, with several officials still concerned about insufficient resilience in the job market. Additionally, U.S. employment showed weakness in early 2026. Although it stabilized toward the end of last year, nonfarm payrolls unexpectedly declined in February, highlighting underlying risks. Compared to the oil price shock triggered by the Russia-Ukraine conflict in 2022—when inflation was already high and the labor market tight, prompting the Fed to quickly initiate a rate-hiking cycle—the current inflation and employment environment is markedly different. Corporate demand for labor is no longer strong, and supply chain pressures are relatively mild. At the same time, the Fed retains policy flexibility. Some officials have indicated that multiple rate cuts remain possible in the future, while not ruling out the potential for rate hikes under specific conditions. In market terms, changes in rate futures are also interpreted as "hedging trades." Analysts point out that some trades do not directly predict rate hikes but are instead risk hedges against the possibility of inflation spiraling out of control in extreme scenarios. Furthermore, the policy outlook is influenced by political factors. If Kevin Warsh, nominated by former President Trump for Fed chair, is confirmed, his repeated emphasis on cutting rates as soon as possible could further reduce the likelihood of a rate hike.