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Powell Won, but the Fed Might Still Lose
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- Fed Chair Jerome Powell accused the Justice Department of threatening him with an indictment for not cutting rates as Trump demanded.
- Powell’s public video dismissed the subpoenas as pretexts, rallying bipartisan support for the Fed and preserving its independence.
- Powell’s term ends in May, raising concerns his successor, Kevin Warsh, will face pressure from Trump and compromise Fed independence.
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Iran Conflict Spurs Rebound in U.S. Borrowing Costs
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- U.S.-Israeli attacks against Iran halted a U.S. government bond rally, pushing the 10-year Treasury note yield above 4%.
- The conflict fueled a jump in energy prices, raising fears of inflation and driving up market-based inflation expectations.
- Investors have dialed back bets on interest-rate cuts this year, with chances of two cuts dropping to around 60% from 79%.
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BOJ Governor Sticks to Rate-Hike Stance Amid Iran Tensions
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- Bank of Japan Gov. Kazuo Ueda reaffirmed commitment to further interest-rate increases despite Middle East instability.
- The Middle East conflict could complicate policymaking, risking an economic shock and a sudden surge in inflation.
- Ueda pledged to monitor the yen closely, as its weakening threatens to drive import-led inflation.
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Swiss Inflation Holds Steady at Low Level as Franc Concerns Swirl
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- Swiss inflation remained at 0.1% in February compared with a year earlier, unchanged from January, worrying the central bank.
- The Swiss National Bank has announced an increased willingness to intervene in foreign-exchange markets to counter the franc’s appreciation.
- The franc gained over 14% against the dollar in the past year, driven by safe-haven demand amid President Trump’s tariffs.
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Kashkari Says Fed Can Sit Tight as War Clouds the Outlook
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- Minneapolis Fed President Neel Kashkari said that one or two rate cuts are possible if inflation cools, but that the Iran war could justify an extended pause.
- Kashkari said he views the Fed’s 3.5%-3.75% interest-rate setting as close to a neutral level that neither spurs nor slows economic activity.
- Kashkari said the Iran war adds another reason for the Fed to wait on rate cuts.
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Fed’s Williams Says Cooling Inflation Could Allow for Future Rate Cuts
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- New York Fed President John Williams said recent interest-rate cuts have left monetary policy well calibrated, but cooler inflation could warrant more easing.
- Williams explained that if inflation declines while rates hold steady, monetary policy would inadvertently become more restrictive.
- Traders broadly expect the Fed to hold interest rates steady at its next policy decision, scheduled for March 18.
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U.K. Government Sees Debt Plan On Track, But Flags Fresh Uncertainty
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- U.K. Treasury Chief Rachel Reeves said the government is on track to cut borrowing, but attacks on Iran made the outlook uncertain.
- The Office for Budget Responsibility estimates the fiscal year deficit at 4.3% of economic output, the smallest since the Covid-19 pandemic.
- The conflict has raised energy prices, potentially slowing U.K. growth and pushing consumer prices and borrowing costs higher.
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Eurozone Jobless Rate Hit New Record Low in January
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- The eurozone unemployment rate fell to a new record low of 6.1% in January, down from 6.2% in December.
- The eurozone jobless rate is projected to remain stable this year, though a prolonged attack on Iran could affect employment.
- In Germany, the number of unemployed people fell to just above 3 million in February, with the adjusted rate at 6.3%.
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China PMIs Send Mixed Signals as Markets Watch for Stimulus
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- China’s official manufacturing purchasing managers index fell to 49.0 in February, signaling continued economic weakness.
- The February manufacturing PMI reading was below January’s 49.3 and missed economists’ 49.3 forecast.
- China’s nonmanufacturing PMI edged up to 49.5 in February from 49.4, with service activity rising due to the Lunar New Year.
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Australia’s Growth Accelerates, Bolstering Case for RBA to Raise Rates
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- Australia’s economy grew 0.8% in Q4, 2.6% from a year earlier, exceeding its speed limit and fueling rate hike expectations.
- The Reserve Bank of Australia raised its official cash rate in February, noting inflation exceeding its 2%-3% target.
- RBA Gov. Michele Bullock said all policy meetings are “live” as money market bets on a March rate hike increase.
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Middle East Conflict Circles the World’s Markets, Stirring Fears of Stalled Growth, Inflation
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- A widening Middle East conflict, threatening to halt access to the Strait of Hormuz, sparked global stock market declines and an oil price spike on Tuesday.
- President Trump ordered the U.S. International Development Finance Corp. to provide insurance and guarantees for Persian Gulf maritime trade.
- U.S. crude futures ended 4.7% higher at $74.56 a barrel, while diesel futures rose to $3.19 a gallon, their highest settlement value since 2023.
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Kraken Becomes First Crypto Firm to Win Access to Fed’s Core Payments System
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- Kraken says its banking unit gained access to the Federal Reserve’s core payment systems, becoming the first crypto firm to do so.
- The master account approval gives Kraken Financial direct access to Fedwire, enabling faster transactions for clients and traders.
- The approval marks a major win for the crypto industry, whose prospects have brightened under President Trump’s administration.
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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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