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Fed’s Waller Says Prolonged Iran Conflict Could Block Path to Rate Cuts

  • Fed governor Christopher Waller said a prolonged Middle East conflict could prevent the central bank from cutting interest rates this year.
  • Waller noted the Iran war and President Trump’s tariff agenda are economic shocks that could keep inflation elevated.
  • He also said reduced labor growth from an immigration crackdown means lower payrolls may not signal a recession.

 
Bank of Canada to Track Longer-Term CPI Expectations For Guidance on Rates, Macklem Says

  • Bank of Canada Gov. Tiff Macklem expects March inflation accelerated, likely below 3%, and will closely watch inflation expectations.
  • Macklem said the central bank aims to avoid raising rates too early amid weak growth or too late, letting inflation entrench.
  • Statistics Canada will release March inflation data Monday, followed by the Bank of Canada’s survey on expectations.
BOE’s Chief Economist Skeptical Of ‘Wait-and-See’ Response to Inflation Threats

  • Bank of England chief economist Huw Pill expressed skepticism about waiting to assess the Middle East conflict’s impact on U.K. inflation.
  • The Bank of England left its key interest rate unchanged last month but was prepared to raise borrowing costs due to surging energy prices.
  • Pill has consistently voted for higher borrowing costs, arguing wages are likely to rise too rapidly for the 2% inflation target.
EU Trade Surplus Narrows From 2025’s Pre-Tariff Surge

  • The EU’s February trade surplus eased to 9.1 billion euros from 22.9 billion euros in February 2025, when firms front-loaded exports.
  • U.S. companies front-loaded EU exports in early 2025 to avoid President Trump’s expected tariffs, causing a 26% drop in EU exports to the U.S. in February.
  • The war in Iran and the Strait of Hormuz closure will likely lead to a downturn in EU energy imports and higher consumer costs.
 

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