A gallon of gas rose on average from $3 in February to $4.15. This monthly jump in fuel prices drove a 0.9% increase in monthly headline inflation in March, which would annualize to a rate exceeding 11%. The rise was driven by energy costs linked to the Iran war.
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monetary policy Oil Price Spikes and Inflation Data Force Federal Reserve to Hold Rates Steady
The Dow fell 1.6%, the S&P 500 fell 1.4%, and the Nasdaq Composite lost 1.5%, reaching their lowest levels since November. The 10-year U.S. note yield rose nearly 6 basis points to approximately 4.26% as investors sold bonds. These movements occurred after the Federal Reserve concluded a policy meeting on March 18 with no change to interest rates. Fed Chair Jerome Powell cited inflation concerns and uncertainty from the war in Iran as the reasons for the decision. A measure of wholesale price inflation arrived hotter than analysts had expected. Brent crude oil prices rose nearly 6% to around $105 a barrel, while the nationwide average for a gallon of gas is $3.86. The VIX Composite spiked nearly 10%.
Consumer inflation expectations for the next year jumped from 3.8% in March to 4.8% in April. Expectations for the next five years rose from 3.2% to 3.4%.
Related Brief 2d ago
commodities Gold holds steady as inflation data looms and Middle East tensions cloud rate outlook
Gold prices stabilized near $4,721.51 per ounce on Thursday as investors weighed conflicting signals from inflation expectations and geopolitical risk, with a key U.S. inflation report looming. The fragile U.S.-Iran ceasefire and Israel’s heavy strikes on Lebanon — which killed hundreds and triggered retaliation threats — have kept safe-haven demand in play, but rising energy prices are feeding inflation fears that undercut gold’s appeal. Since the conflict began on February 28, spot gold has fallen more than 10%, pressured by a re-pricing of interest rate expectations. The Federal Reserve’s March meeting minutes revealed that more policymakers saw potential need for rate hikes as inflation continues to run above the 2% target. With U.S. Personal Consumption Expenditures data due at 1230 GMT, markets are poised for clues on whether the Fed will maintain restrictive policy or pivot toward cuts. Higher rates typically hurt non-yielding assets like gold, even as Middle East supply disruptions lift oil prices and inflation. While GoldSilver Central’s Brian Lan expects gold to consolidate between $4,607 and $4,860, Standard Chartered forecasts a recovery in coming months as geopolitical risk remains elevated.
San Francisco Fed President Mary Daly stated that a higher Consumer Price Index number would not necessarily require a change in plans to keep rates on hold. The Federal Reserve is maintaining the policy rate on hold while core inflation, which excludes food and energy, remained at 2.6% year-over-year in March.
Related Brief 2d ago
monetary policy Borrowing costs will not drop until late 2027
Consumers and businesses will not see cheaper loans until late 2027. Financial markets have already priced in this shift, reversing expectations held at the start of the year. The Federal Reserve kept its key rate at 3.6% in the March meeting. This decision follows a jump in inflation to 3.4% year-over-year in March, up from 2.4% in February. The surge was driven by rising oil prices tied to the conflict in Iran. Within the Fed, the number of policymakers supporting the possibility of a rate hike has increased from 'several' in January to 'some'. In Federal Reserve terminology, 'some' indicates a larger group than 'several'. Chair Jerome Powell stated that further cuts depend on clear evidence of cooling inflation. The result is that markets anticipate no rate cuts until late 2027.
Investors now expect the central bank to keep its policy rate on hold until well into 2027.
Related Brief 1d ago
inflation Gasoline prices surge 21.2% in a month as Iran blocks Strait of Hormuz, pushing inflation to 3.3%
Inflation surged to 3.3% in March over the past 12 months, the highest level since May 2024, up sharply from 2.4% the previous month. The jump marks a direct hit to household budgets, as rising energy costs ripple through transportation, shipping, and consumer goods. The core Consumer Price Index, which excludes volatile food and energy, also ticked up to 2.6% from 2.5%, signaling broader price pressures are persisting. The main driver: gasoline prices soared 21.2% in a single month — the largest monthly increase in two years. That spike was not random. It followed Iran’s blockade of the Strait of Hormuz, a chokepoint for 20% of the world’s oil supply. The disruption has triggered the worst energy supply shock on record, constricting global oil flows. With energy-intensive sectors now passing on higher costs, inflation is accelerating just as the Federal Reserve weighs when to cut interest rates. That decision is now in doubt — the hotter CPI report undermines the case for near-term rate relief.
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