New Delhi, May 17 -- The US Federal Reserve is likely to drop its easing bias at the next FOMC meeting and shift toward a tightening stance through 2026, with a 20% chance of a 25 bps hike in December if the Strait of Hormuz remained closed and energy prices spiked further, Elara Securities said in a research report.

The brokerage noted that inflation risks now decisively outweighed labour market concerns, keeping the Fed on hold for the rest of CY26.

Elara Securities withdrew its earlier forecast of three 75 bps rate cuts in CY26, citing incremental inflationary pressure from the US-Iran conflict against a backdrop of a softening but steady labour market. The brokerage said the trajectory of inflation had turned upward and that the Fed...