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Fed meeting: Iran war and Powell future add to uncertain outlook
US Federal Reserve officials will approach this week's two-day policy meeting with questions mounting over the economic fallout of the Iran war and the central bank's leadership transition.For Jerome Powell, whose term as Fed chairman expires in mid-May, this could be his last time steering the central bank's rate-setting committee. Although the Fed has to contend with the repercussions of the two-month Iran war, it is widely expected to hold interest rates at around 3.6 per cent.“For the policy decision, Iran matters more because it directly affects inflation, growth, and consumer confidence right now,” said Noureldeen Al Hammoury, chief market strategist at Equiti Group in Dubai.Major central banks in Japan, Germany, Canada and England are also expected to keep rates steady this week. The UAE Central Bank and most others in the Gulf are also be expected to keep rates steady because of their US dollar currency pegs, with Kuwait, whose dinar is tied to a basket of currencies, potentially the sole exception.These decisions would mirror the word of caution from the International Monetary Fund, which anticipates the war-driven oil shock to boost inflation and slow economic growth.Oil prices have surged more than 44 per cent since the US and Israel launched co-ordinated strikes against Iran on February 28, with Tehran responding by launching retaliatory attacks on key infrastructure across the wider Middle East.Damage to infrastructure and the effective closure of the Strait of Hormuz have constrained exports of oil and refined products from the region. The war has led oil prices to surge. Brent, the benchmark for two-thirds of the world's oil, settled at $105.30 a barrel last week, while West Texas Intermediate, the gauge that tracks US crude closed at $94.40 per barrel. On a weekly basis, Brent was up more than 16 per cent and WTI jumped about 14 per cent.The surge in prices since the start of the war has rivalled the 2022 energy shock following Russia's invasion of Ukraine. Latest research from the Dallas Fed anticipates prolonged disruption, under which US crude will peak at $115 a barrel in October, which would push headline inflation beyond 4 per cent this year.Peter Andersen, founder of Andersen Capital Management, said current oil prices suggest investors remain optimistic of a short-lived conflict. “I'm not so sure about that,” he said.While the US benefits as the world's top crude exporter, Derek Tang, economist at MPA Macro in Washington, expects th...
Fed Chair Powell's future unclear despite dropped DOJ probe - MSN
Fed Chair Jerome Powell's future remains uncertain after DOJ drops its probe, with political pressure and independence concerns still weighing at central bank.
Markets reset Fed rate-cut bets as DOJ drops Powell probe
Markets reset expectations for Fed rate cuts after DOJ drops its probe into Jerome Powell, easing uncertainty and shifting the outlook for policy and investors.
DOJ drops criminal probe into Fed Chair Jerome Powell
The Department of Justice (DOJ) announced Friday it was dropping its criminal investigation into Federal Reserve Chair Jerome Powell and his handling of renovations at the central bank. The announc…
