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The Fed Keeps Getting Hit With New Shocks in Its Yearslong Inflation Fight
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- Federal Reserve officials face renewed inflation challenges from America’s war in the Middle East, complicating rate-cut expectations.
- The core personal-consumption expenditures price index, a key inflation measure, accelerated to 3.1% in January from 2.6% last April.
- Traders now see a 47% chance of a rate cut by December, down from 74% before the Iran war began last month.
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Australia’s RBA Raises Rates in Split Decision as Inflation Fears Intensify
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- The Reserve Bank of Australia increased the official cash rate to 4.10% from 3.85% due to inflation concerns.
- The RBA’s interest rate decision was split, with five of nine board members voting for the increase.
- Brent crude oil is up 65% this year, hitting a 12-month high of $103.14 a barrel due to the Strait of Hormuz closure.
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Indonesia’s Central Bank Holds Rates as Middle East Risks Cloud Outlook
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- Bank Indonesia kept its benchmark interest rate at 4.75% due to economic risks from the Middle East conflict and surging energy prices.
- The central bank aims to stabilize the rupiah and keep inflation within its 1.5%-3.5% target amid the Iran conflict.
- Indonesia considers diversifying crude oil imports from the Middle East, as analysts estimate its oil reserves cover 23 days of demand.
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Canada Inflation Cooled in February
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- Canadian inflation eased to a nine-month low in February, with the consumer-price index rising 1.8% from a year earlier.
- The 1.8% inflation rate fell below the Bank of Canada’s 2% target for the first time since last August.
- Economists expect inflation to accelerate in coming months due to rising energy costs from the Iran war.
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German Financial Sentiment Plummets on Iran War
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- German investor confidence collapsed in March amid surging energy prices due to the Middle East conflict.
- The ZEW Indicator’s minus 0.5 reading in March was the first negative result since April last year, hitting energy-intensive industries.
- Expectations for European Central Bank rate hikes increased since Feb. 28, contributing to declining sentiment in the construction sector.
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U.S. Home Builder Sentiment Inches Higher But Affordability Concerns Persist
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- U.S. home builder confidence rose slightly in March, with the NAHB/Wells Fargo Housing Market Index reaching 38 from 37 in February.
- Builders continued to face elevated land, labor, and construction costs, leading 37% to cut prices and 64% to offer sales incentives.
- Uncertainty from the Iran conflict and oil prices, along with downpayment hurdles, remain headwinds for the housing market.
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New York Manufacturing Activity Contracts in March
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- Factory activity in New York state contracted in March, as the Federal Reserve Bank of New York’s manufacturing index unexpectedly fell to minus 0.2.
- The pace of input price increases declined significantly in March but remained elevated, while selling price increases were little changed.
- Firms expressed optimism about the next six months, with the future business conditions index at 31.0 and capital spending plans strengthening.
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Bank of America Agrees to Settle Lawsuit Over Jeffrey Epstein Ties, U.S. Court Says
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- Bank of America agreed to settle in principle a lawsuit alleging it maintained a relationship with Jeffrey Epstein and failed to report suspicious activities until after his death.
- The lawsuit, filed on behalf of a woman who said she was abused by Epstein, claimed she opened an account at the bank in 2013 at the direction of his accountant.
- Terms of the settlement were not disclosed, and Judge Jed Rakoff must approve the agreement.
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About Us
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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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