Markets wobble as Fed signals caution
- Federal Reserve Governor Christopher Waller said on April 17 he is cautious about cutting rates soon, after the Iran conflict drove energy prices higher and complicated the inflation outlook. - A Reuters poll published April 22 found 56 of 103 economists expect the Fed’s rate to stay at 3.50% to 3.75% through September, up from a late-March consensus for cuts. - Markets head into the April 28-29 Federal Open Market Committee meeting with a hold nearly fully priced and investors focused on Powell’s language, not the decision. (federalreserve.gov)
Federal Reserve Governor Christopher Waller said on April 17 that he is cautious about cutting interest rates soon after the Iran conflict pushed energy prices higher. (federalreserve.gov) Waller said the war disrupted Middle East energy production and transportation, sent global energy prices soaring, and could leave a lasting mark on inflation and U.S. growth if disruptions persist. (federalreserve.gov) He also pointed to a slower-growing labor force after net immigration fell from 2.3 million in 2024 to a minimal level in 2025 and remained very low in 2026. (federalreserve.gov) That combination has made the next Federal Reserve move less about when to cut and more about whether inflation can cool again without another energy shock. (federalreserve.gov) (money.usnews.com) A Reuters poll of economists published on April 22 found 56 of 103 expect the benchmark rate to remain at 3.50% to 3.75% through the end of September. In late March, nearly 70% had expected at least one cut by then. (money.usnews.com) The same poll found 71 economists still expect at least one cut by the end of 2026, but nearly a third now see no change this year, almost double the share in the previous survey. (money.usnews.com) The next checkpoint is the Federal Open Market Committee meeting on April 28 and 29. Markets are pricing a 99.4% probability that the Fed leaves rates unchanged at 3.50% to 3.75%. (primerates.com) Because the April meeting does not include new quarterly projections, investors will be parsing the statement and Jerome Powell’s press conference for any change in language on inflation, jobs, and the timing of a first cut. (primerates.com) Waller’s speech showed how narrow that path has become: central bankers can often look through a temporary oil spike, but he said a prolonged disruption would be different. (federalreserve.gov) For now, the market’s wobble is less about a surprise rate decision than about whether the Fed sounds willing to wait even longer. (money.usnews.com) (primerates.com)
