[Analysis: Middle East conflict boosts inflation expectations, market fears Fed may struggle to cut rates] Odaily Planet Daily News – As the escalation of the Middle East conflict drives oil prices to surge, market expectations for short-term inflation in the U.S. have significantly heated up, further intensifying concerns about the Federal Reserve's prospects for rate cuts. Data shows that the one-year breakeven inflation rate has risen to 4.62%, the highest level since June 2022; the two-year breakeven inflation rate has also climbed to 3.18%, marking a new high in nearly a year. Analysts point out that if high oil prices continue to push inflation upward, the Federal Reserve may find it difficult to initiate rate cuts from the current 3.5%–3.75% level. Traders currently estimate that the probability of the Federal Reserve not cutting rates throughout 2026 has risen to approximately 44.7%.