T raders have priced out all wagers on a Federal Reserve rate cut this year. The shift comes as the six-week Iran war has sent crude oil prices surging more than 30% and pushed gasoline and diesel costs to record levels. In March, U.S. consumer prices increased by the most in nearly four years.
Related Brief 1d ago
monetary policy One rate cut is all that's left on the table as inflation shocks and political pressure collide at the Fed
One rate cut is all that remains within reach for the Federal Reserve this year, and even that is uncertain. Inflation pressures from a global supply shock — triggered by the six-week Iran conflict — have already pushed U.S. consumer prices to their fastest rise in nearly four years, driven by a record surge in gasoline and diesel. Crude oil prices have jumped more than 30%, feeding directly into household budgets and hardening inflation expectations. Short-term inflation expectations have ticked up, and the Fed, meeting in March, held its benchmark rate steady in the 3.50% to 3.75% range. Still, a majority of policymakers signaled at least one cut could be appropriate in 2024. Former Treasury Secretary Janet Yellen, speaking at the HSBC Global Investment Summit in Hong Kong, said that if she were attending the next FOMC meeting, she would write down one cut — later in the year — as her best guess. Yet markets have moved even further away from that view: traders have now priced out any chance of a 2024 cut, reversing earlier bets on two. The shift reflects not just inflation but growing concern over political interference. Former President Donald Trump has launched an aggressive campaign to pressure the Fed, criticizing Chair Jerome Powell and pushing to replace him with Kevin Warsh, whom Trump believes would deliver steep rate cuts. Trump has also targeted the Fed’s headquarters renovation, sending prosecutors from Jeanine Pirro’s office to inspect the project over cost concerns. Yellen, who chaired the Fed from 2014 to 2018, called the level of political pressure unprecedented, describing it as a threat to the central bank’s independence. With inflation limiting monetary flexibility and political forces testing institutional boundaries, the path to easier policy has narrowed to a single, fragile possibility.
Federal Reserve policymakers in March kept benchmark interest rates steady in the current 3.50% to 3.75% range. While a majority of policymakers projected at least one rate cut would be appropriate this year, former Treasury Secretary Janet Yellen suggests a single cut remains possible later in the year.
Related Brief 1d ago
trade policy Tariffs Could Return by July—But Rate Cuts May Be Needed Even Sooner
Reimposing Section 301 tariffs would increase import costs for goods from targeted countries. Higher import costs could be passed on to consumers in the form of higher prices for certain goods. U.S. Treasury Secretary Scott Bessent stated that Section 301 tariffs could be reimposed at previous levels by early July. The U.S. Supreme Court ruled President Trump’s retaliatory tariffs unlawful earlier this year. In response, the Trump Administration imposed a 10% tariff on various countries under Section 122 of the Trade Act. Section 301 of the Trade Act allows the U.S. to impose additional tariffs in response to unfair trade practices. A rate cut would reduce borrowing costs for consumers and businesses. The Fed’s benchmark rate is currently held at 3.50–3.75%. Bessent argued that core inflation, excluding food and energy, is falling. Falling core inflation creates room for the Federal Reserve to cut its benchmark interest rate. Lower borrowing costs would support consumer spending and business investment.
"If I had to write one thing down on a piece of paper... I suppose my guess would be that maybe there would be a cut later in the year," Yellen said at the HSBC Global Investment Summit in Hong Kong.
Related Brief 3h ago
monetary policy Federal Reserve Chairman Jerome Powell's term term ends May 15
President Donald Trump has threatened to fire Jerome Powell if he does not step down when his term as chair ends May 15. The move comes after a series of confrontations between the administration and the Federal Reserve. U.S. attorneys from the Washington D.C. office have been leading a criminal probe into Powell, which focuses on Powell's testimony to Congress regarding cost overruns in a multibillion-dollar multibillion-dollar office renovation project. The investigation seeks to determine if public money was wasted and if Powell Powelly made false statements to Congress. U.S. Attorney Jeanine Pirro, citing an 80% cost overrun, stated the project deserves review. Chief Judge James Boasberg, however, ruled that the DOJ's probe was driven by President Donald Trump's political animus toward Powell, and effectively blocked the investigation. Following this ruling, DOJ prosecutors Carlton Davis and Steven Vandervelden, and a case agent, made an unannounced visit to the Fed's construction site to request a tour. Fed management denied them access to the site without preauthorized clearance. The prosecutors were turned away. President Donald Trump has again threatened to fire Powell if he does not step not step down when his term as chair ends May 15.
Short-term inflation expectations have risen slightly, which Yellen described as a broad supply shock. This occurs as President Donald Trump continues to press the Federal Reserve for steep rate cuts, with his nominee to replace Jerome Powell, whose term ends in May, being Kevin Warsh.
Related Brief 11h ago
trading regulations Retail Day Trading Now Governed by Risk Exposure Rather Than Account Balance
Retail investors with less than $25,000 in their margin accounts can now execute more than four day trades in five business days. This change follows the SEC's approval of a mesma rule change proposed by FINRA, which eliminates the Pattern Day Trader designation and the $25,000 minimum equity requirement. The previous framework restricted margin account holders who made four or more same-day trades within five business days from continuing to day trading unless they maintain that balance. FINRA stated the $25,000 threshold was designed to prevent overtrading when commissions eroded returns, a logic that no longer applies in the era of zero-commission trading. The SEC action also eliminates all related day-trading buying power provisions under FINRA Rule 4210. Broker-dealers must now follow new intraday margin standards that require them to monitor and address real-time risk exposure in customer margin accounts. Customers may be required to add funds to their accounts or reduce positions if their risk exposure grows too large.
Yellen, who chaired the central bank from 2014 to 2018, said she has "never seen a threat of this level to the Fed before," after prosecutors from U.S. Attorney Jeanine Pirro’s office visited the Fed headquarters renovation project on Tuesday. Janet Yellen sees one interest rate cut as possible later in the year.
Related Brief 1d ago
central banking Kraken cuts out bank intermediaries with first crypto Fed master account
Kraken can now move money faster and more cheaply by cutting out bank intermediaries. The Kansas City Fed granted the crypto exchange's Wyoming banking arm a limited-purpose master account for one year, allowing it to access the wholesale payments system Fedwire. This access lets Kraken move funds directly via the Fed's payment rails and hold limited balances overnight. Unlike most accountholders, Kraken cannot earn interest on reserve balances, access emergency Fed lending, or use the FedNow and ACH payment systems. The account will initially serve wholesale clients.
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