Fed Meeting Amid Oil Spike Slashes Rate‑Cut Outlook
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- Federal Reserve will meet this week, its first meeting since the United States and Israel launched air strikes on Iran two weeks ago, a move that sparked a sharp surge in oil prices.
- Crude oil prices climbed to nearly $120 per barrel at the start of last week before easing toward the $100 level by Friday amid heightened geopolitical tension.
- S&P 500 closed the week roughly 5% below its late‑January record high, marking a third consecutive weekly decline.
- Interest‑rate futures now price in less than a 0.25‑percentage‑point rate cut by December, down from expectations of roughly two cuts just weeks earlier.
- Jerome Powell is expected to keep rates unchanged at the Wednesday meeting and will release updated inflation and growth forecasts, with his press conference seen as a key market signal.
- Kevin Warsh, President Trump’s nominee, is slated to succeed Powell later this year, adding uncertainty about future policy direction.
- Nvidia’s annual developer conference is scheduled for next week, potentially reviving interest in the AI trade that previously boosted tech stocks.
Why it matters: The Fed’s decision will shape borrowing costs for businesses and consumers, while the oil‑driven inflation shock threatens to delay the anticipated rate cuts that investors had priced in, potentially squeezing equity valuations and benefiting sectors like energy that stand to profit from higher prices.
