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Why Fed Rate-Cut Prospects Have Dimmed, With or Without a Cease-Fire
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- A cease-fire between the U.S. and Iran presents a new challenge for the Federal Reserve, potentially leading to an extended interest-rate pause.
- Minutes from the Fed’s March 17-18 meeting showed officials held the benchmark rate steady and worried inflation progress could be slower than expected.
- St. Louis Fed President Alberto Musalem said he would watch for ripple effects that keep prices elevated even after supply chains are restored.
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What’s Next for the U.S. Economy After Iran Cease-Fire
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- A two-week cease-fire involving the U.S., Israel and Iran has brought some relief, with the S&P 500 up 2.5% and benchmark U.S. oil prices falling 16%.
- Economists caution that the war’s economic fallout won't be undone overnight, citing shipping backlogs and damaged infrastructure.
- The cease-fire could slow the rate of inflation in April and May, but the Federal Reserve is unlikely to lower interest rates soon.
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New Zealand Central Bank Governor Vigilant to Inflation Threat
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- New Zealand’s central bank governor, Anna Breman, stated the RBNZ is ready to forcefully raise interest rates if the Middle East crisis causes sustained inflation.
- The RBNZ held interest rates at 2.25% this week, but discussed tightening policy due to the Middle East crisis altering the inflation outlook.
- New Zealand’s economy faces uneven growth, high spare capacity, and elevated unemployment, which could dampen inflation pressures.
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Wall Street Is Whiffing on Its Economic Forecasts
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- Economists have struggled to accurately forecast monthly job creation in 2026, missing projections by an average of 112,000 jobs.
- Challenges include the Trump administration’s immigration crackdown, strikes, bad weather, and technical changes to official calculations.
- The Bureau of Labor Statistics fine-tuned its “birth-death model” in January, making initially reported job numbers less predictable.
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German Industry Posted Surprise Contraction Ahead of Iran War
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- German industrial production unexpectedly fell 0.3% on month in February; energy-price shock from Middle East war expected to hamper output.
- The decline was driven by falls in construction, electronic and optical products, and pharmaceuticals, though car production grew.
- Soaring oil-and-gas prices from U.S.-Israeli strikes on Iran will pressure industrial companies, leading some chemical firms to raise prices.
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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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