Related Insights
The FOMC’s decision to maintain the Fed Funds Rate at 3.50-3.75% met broad market expectations. However, the decision also came across as a hawkish hold from the near-unanimous 11-1 vote to keep the current restrictive stance, the updated Summary of Economic Projections (SEP), which raised the GDP growth and PCE inflation forecasts, and the higher-than-expected PPI readings before the meeting. Fed Chair Powell emphasized the Fed’s priority of ensuring no repeat of a de-anchoring of inflation expectations.
While the FOMC’s hawkish stance has provided a momentary anchor for the USD, we remain wary of assuming this marks a definitive trend, given the market’s persistent tendency to oscillate from event to event amid heightened geopolitical uncertainty. Markets will be looking to today’s central bank meetings in Europe to confirm pricing for the European Central Bank, the Bank of England, and the Swiss National Bank to hike before the Fed. Furthermore, the arrival of Japanese Prime Minister Sanae Takaichi in Washington introduces a critical diplomatic layer to the FX landscape, potentially serving as a prelude to tomorrow’s Bank of Japan decision as the JPY continues to hover near key intervention thresholds.
Finally, the geopolitical backdrop remains a primary source of market volatility as the conflict with Iran enters a more protracted and challenging phase. However, President Donald Trump is facing mounting domestic backlash against prospect of a "new forever war." Public approval for the military intervention has softened as the closure of the Strait of Hormuz continues to drive energy prices higher, creating a political schism within his MAGA base amid international isolation. With Brent crude above USD110 this morning, having reached 100 last week and 90 the week prior, political pressure will mount should prices revisit the near-120 high seen earlier this month.
Quote of the Day
“It is easy to sit up and take notice, What is difficult is getting up and taking action.”
Honore de Balzac
March 19 in history
Pluto was photographed for the first time in 1915 by the Lowell Observatory, although it was not recognized as a planet until 15 years later in 1930.
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