The Federal Reserve is on the cusp of a “regime change” after the Department of Justice dropped its criminal investigation into Fed Chair Jerome Powell, eliminating a potential obstacle to confirming President Donald Trump’s nominee Kevin Warsh to replace him.
Central bankers are expected to hold interest rates steady at their policy meeting next week — likely Powell’s last as chair — doing little to ease consumers’ current affordability challenges.
With an inflation shock, a war with Iran and an uncertain labor market, futures market pricing is implying virtually no chance of a rate cut, according to the CME Group’s FedWatch gauge.
Brent crude has surged more than 55% since the Iran war began in late February, triggering price jumps for gasoline and jet fuel. Many employers are putting hiring plans on hold, and consumer confidence is at an all-time low.
“Even if gas spikes were to go away, prices are still higher,” said certified financial planner Stephen Kates, a financial analyst at Bankrate. “Even if we get back to where we were prior to the Iran conflict, there’s plenty of evidence that this is not the right time to get back to cutting rates.”
