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Powell Says Fed Can Look Past Oil Shock, but Warns Patience Has Limits
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- Federal Reserve Chair Jerome Powell said the central bank is inclined to hold rates steady amid the Iran war’s energy shock, but may act if public inflation expectations shift.
- President Trump named Kevin Warsh to succeed Powell as Fed chair; a senator vowed to block confirmation until a probe ends.
- The Fed held rates steady at its March 18 meeting, and colleagues signaled a higher bar for future rate cuts.
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Fed’s Williams: Middle-East Developments Have Added Significant Economic Uncertainty
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- New York Fed President John Williams said the Iran war will likely push inflation higher, but the Fed’s current rate setting allows it to wait.
- The Iran war and global oil market shock have created a challenging environment for the Fed since Feb. 28.
- Traders’ bets shifted toward the Fed holding policy steady this year, as the labor market has stabilized since last summer.
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Eurozone Inflation Jumps as Iran War Raises Energy Prices
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- Eurozone consumer prices rose 2.5% in March, the fastest pace since January 2025, driven by energy prices due to the Iran war.
- ECB policymakers are weighing a response to rising inflation, with investors pricing in nearly three rate hikes this year from 2.0%.
- The ECB upgraded its 2026 inflation forecast to 2.6% and downgraded its 2026 GDP growth forecast to 0.9% at its March meeting.
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Japan Economic Data Signal Uneven Recovery as Iran War Risks Mount
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- Japan’s economy shows mixed signals with cooling Tokyo inflation and falling industrial output, complicating the Bank of Japan’s interest-rate path.
- Tokyo consumer prices, excluding fresh food, rose 1.7% in March year-on-year, a slower pace than February’s 1.8%.
- Industrial output fell 2.1% month-on-month in February, while the unemployment rate shrank to 2.6% from 2.7%.
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German Inflation Rebounds on Soaring Energy Prices
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- German inflation rose to 2.8% in March, driven by energy prices due to the war in Iran, exceeding the ECB’s 2% target.
- Energy prices increased 7.2% year-over-year in March, the first rise since December 2023, while goods inflation climbed to 2.3%.
- The European Central Bank left its key rate unchanged, but policymakers expect the Middle East conflict to drive up inflation.
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Bank of Korea Governor Nominee Says Dollar Liquidity Remains Ample
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- Bank of Korea governor nominee Shin Hyun-song said U.S. dollar liquidity in South Korea is ample despite recent won volatility.
- Shin attributed the ample dollar funding to robust foreign inflows into the local bond market, particularly through foreign-exchange swaps.
- The dollar was recently up 1.2% against the won at 1,535.30, according to LSEG data, marking the local currency’s weakest level since 2009.
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Indian Economy Faces Risks on Multiple Fronts From Middle East Conflict
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- The Iran war’s shipping disruptions and surging energy costs threaten India’s economy, according to the Indian government’s economic report.
- The Reserve Bank of India capped net open rupee positions at $100 million by April 10, causing the dollar to fall 1.6% against the rupee.
- India’s chief economic adviser warned of “considerable downside” to the 7.0% to 7.4% growth forecast for fiscal year 2027.
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WSJ Pro Central Banking brings you news and analysis from a global team of reporters and editors at The Wall Street Journal and Dow Jones Newswires. Send your tips, suggestions and feedback to service@dowjones.com. An artificial-intelligence tool created these summaries, which are based on the text of the article and checked by an editor. Read more about how we use artificial intelligence in our journalism.
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