A Fed rate hike won't fix an oil price problem, veteran broker argues

28 Jul 2026

With inflation remaining elevated thanks to high energy costs due to the conflict in Iran, many market experts see a scenario where a Fed rate hike could be on the horizon.

According to last week’s numbers from the Mortgage Bankers Association, mortgage rates climbed to 11-month highs last week as oil prices spiked and Treasury yields followed. However, oil prices pulled back again today as a ceasefire pause knocked Brent crude below $84 a barrel, and the 10-year Treasury fell with it.

A Fed rate hike would be the normal market expectation when inflation is elevated, and the jobs market is mostly stable. However, one veteran broker believes the seesaw that oil prices are causing with Treasury yields shows that the current economic situation requires a different line of thinking.

Amir Nurani (pictured top), broker-owner at Left Coast Leaders in California, said the Fed is being asked to solve a problem that is outside its jurisdiction. The inflation driving rate fears right now is not the kind the Fed can fix, because no interest rate decision changes the price of a barrel of crude.

"Raising rates into that environment isn't necessarily an adequate strategy because just because you raise rates doesn't mean you calm down the oil market," Nurani told Mortgage Professional America. "What was happening before with inflation is we had too much free cash flowing around the country and the consumer was invigorated. You raise rates to slow down the consumer, but when you raise rates, you don't slow down the price of oil."

Why the Fed shouldn’t hike rates

When the Federal Reserve announces its latest rate decision on Wednesday afternoon, Nurani expects another rate hold. In fact, he doesn’t see any cuts or hikes in the near future.

"We are not going to see a rate hike on the horizon. I also don't think we're going to see rate cuts," he said. "I think we're going to be pretty flat this year."

He credited Fed Chair Kevin Warsh as someone who recognizes the oil spike as a one-time external shock rather than the kind of structural inflation that rate policy is designed to address.

"Even though the Fed hasn't moved interest rates at all, you notice mortgage prices increasing," he said. "The reason why mortgage rates are going up is because the long bonds are reacting to the inflationary environment and the uncertainty. When the war calms down, you will see the 10-year treasury fall, and when that falls, mortgage rates will come down."

Nurani said he understood why there were so many headlines about potential rate hikes. It comes back to the fundamental understanding of what the central bank usually does to take care of issues when its mandates get out of alignment. However, this situation is a bit different, and understanding it takes a little more digging.

"It's a very elementary understanding of the problem," he said. "The entire nation understands inflation equals high rates. Most of the market goes, oh, inflation's hot, it's going to vary rates, no doubt about it. And honestly, 90% of the time it might be. But in this little nuance where you have extrinsic variables that have nothing to do with our core economy, these same principles don't apply."

Media headlines play a part as well, as any headline predicting a rate move is going to get more attention than what can be perceived as another boring hold.

"The rising interest rates headline is going to get way more clicks than the opposite," he said. "So it's easy to have that opinion and see it supported when you see inflation go up. But when you understand this a little bit more intimately, you kind of step back and go, yeah, that's not what's going to happen."

What brokers should do

Regardless of the current rate environment or what the Fed announces this week, Nurani said there is an opportunity developing with homebuyers who have decided to make a move no matter what the mortgage rate is.

"You have individuals that have just understood that, ‘Look, this is where rates are at. Eventually I'll buy this house, I'll be able to refinance it down to a lower rate, but for right now, I'll just bite the bullet,’" he said. "You're starting to see a normalized market start to form where people just understand that it's not a fire sale for interest rates, and it's not so bad of an environment that I can't purchase a home."

The rate itself matters less to buyers than it once did, Nurani said, because the conversation has shifted from rate to payment.

"The way that your typical first-time homebuyer operates, regardless of rate environment, is they're looking at what their affordability looks like," he said. "The people that are jumping into homes are just the ones that are going, hey, I can afford it and I want to own a home."

The current rate environment, he said, is a range rather than a reset. It’s a return to historic norms, and that foundation gives brokers and buyers a starting point to work from.

"Rates are off the 7s. They're not going back into the 3s anytime soon," he said. "I think the market's just kind of going, ‘This is normal now.’ Let's operate like we normally would."

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