Markets write off near‑term Fed cut
Investors have largely priced out an imminent Federal Reserve rate cut after Iran‑related inflation concerns re‑emerged, with strategists saying a move this month is now unlikely. (fortune.com) At the same time oil spiked — WTI briefly traded near $105 intraday — and money markets are discounting much lower chances of Fed easing this year. (reuters.com)
Traders have largely ruled out a Federal Reserve rate cut at the central bank’s next meeting after oil surged and inflation fears returned. (cmegroup.com) West Texas Intermediate crude traded above $100 a barrel on April 13 and briefly neared $105 intraday as U.S.-Iran talks collapsed and supply risks in the Gulf intensified. Reuters reported the move fed concerns that higher energy costs could push inflation back up. (cnbc.com) (fortune.com) By April 13, markets saw about a 21% chance of a U.S. rate cut by year-end, down from 40% a month earlier, according to data cited by CNBC from CME FedWatch. CME says its tool reflects probabilities implied by 30-day federal funds futures. (cnbc.com) (cmegroup.com) The Federal Reserve held its benchmark rate at 3.5% to 3.75% on March 18. Chair Jerome Powell said after that meeting that officials had shifted toward fewer cuts even though the median forecast for 2026 still showed one reduction. (cnbc.com) The Fed’s own March projections showed why oil matters so much. Officials lifted their median forecast for 2026 personal consumption expenditures inflation to 2.7% from 2.4% in December, and raised core inflation to 2.7% from 2.5%. (federalreserve.gov) Energy is not the Fed’s only problem, but it is the fastest way for geopolitics to hit prices households notice. Phillip Streible of Blue Line Futures told CNBC that crude oil was likely to “direct inflation” and, in turn, Federal Reserve policy. (cnbc.com) Investors started 2026 expecting two rate cuts, then spent March and April moving those bets further out. Powell said on March 18 that “four or five” officials had shifted from expecting two cuts to one. (cnbc.com) The next Federal Open Market Committee meeting is in late April, and CME’s FedWatch page now points to a hold as the base case. Unless oil retreats and inflation cools quickly, traders are treating an immediate cut as a long shot. (cmegroup.com)
