Fed's 2026 Rate Policy: Exit Strategy for the Chip Crisis?

The Fed's 2026 interest rate policy is directly linked to the chip sector crisis and the U.S.'s Middle East politics. While no change in rates is expected at the July 29 meeting, market expectations have shifted based on the last three months' data. The Fed Funds futures curve now suggests two rate cuts could occur by the end of 2026. This aligns with the cost pressures faced by chip manufacturers and the rising expenses from the U.S.'s Middle East war. Companies like TSMC are closely watching how this rate policy will impact the semiconductor supply chain. Additionally, the China-U.S. rare earth elements conflict could be a topic of discussion in this meeting.