Oil $100 barrel pushes Fed cut hopes to September
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- Markets dropped hopes for early Fed rate cuts after oil prices rose to about $100 a barrel and after U.S.-Israel attacks on Iran.
- CME Group's FedWatch had been pricing a 0.25% cut in June, another in September, and an outside chance of a third before expectations shifted.
- Goldman Sachs pushed its next Fed cut forecast from June to September, while still allowing a possible cut before the end of 2026.
- Fed funds futures traders now see only a single December cut, with no cuts priced in until 2027 or later.
- Trump posted on Truth Social urging Jerome Powell to cut rates immediately, dubbing him "Jerome 'Too Late' Powell".
- January PCE inflation is expected to rise to 3.1% annual, a 0.1 percentage point increase from December, moving further from the Fed's 2% target.
- Stephen Juneau of Bank of America said inflation remains above 2% core PCE despite some stabilizing components, arguing the Fed should not rush to ease.
- Federal Open Market Committee will meet on March 18, with traders assigning near‑100% probability of holding rates steady.
Why it matters: Investors and borrowers lose the prospect of cheaper financing as the Fed is forced to keep rates high to combat inflation, while the Fed itself faces pressure to prioritize price stability over growth, delaying any relief for the economy.
