With the war in Iran in its third week and oil prices roughly 30% higher than a month ago, US Federal Reserve rate setters are gathering to decide on monetary policy.

It is widely expected that, amid heightened uncertainty, the FOMC will vote to hold interest rates within the 3.50–3.75% target range.

For many analysts, the concern around energy prices is less about how high and more about how long.

Barclays noted that the issue of “persistence” will be key for the central bank reaction. “The textbook policy prescription is for central banks to look through temporary supply shocks. However, with inflation expectations still elevated and potentially less firmly anchored after years of above-target price growth, central banks may not have that luxury if high energy prices persist and feed through to consumer inflation.”

Rate markets have already begun to reflect this risk, pricing out the likelihood of further cuts in the first half of the year. As Barclays’ Christian Keller observed, “across the major central banks, markets repriced policy rates higher this week.” (LiveSquawk – Continue Reading)

The European Parliament will hold a committee vote on the EU-U.S. trade deal this week, top lawmakers decided on Tuesday, in a step that will be met with relief in Washington.

Lawmakers from the Parliament’s trade committee will vote on Thursday on legislation to scrap tariffs on U.S. industrial goods — representing the backbone of the EU’s pledge in the trade deal reached at President Donald Trump’s Turnberry golf resort in Scotland last summer.

Bernd Lange, chair of the trade committee, said Tuesday’s discussion had been “quite smooth” and had achieved a broad understanding. “Therefore we will go for the vote on Thursday,” he told POLITICO. (POLITICO - Continue Reading)

President Donald Trump on Tuesday slammed the U.S.′ NATO allies over their reluctance to get involved in the Iran war, before asserting that the U.S. does not need any help with its ongoing military operations.

The alliance of 32 European and North American nations is “making a very foolish mistake,” Trump said in the Oval Office during a meeting with the prime minister of Ireland, which is not a NATO member.

Trump, a longtime NATO critic who has accused the organization of taking advantage of the U.S.′ spending and military strength, called the members’ hesitance to join the Iran war “a great test, because we don’t need them, but they should have been there.” (CNBC – Continue Reading)

A senior Trump administration official said on Tuesday that if a government funding standoff continues, it may force ​the shutdown of some smaller airports in the coming weeks owing to a ‌shortage of security personnel.

The partial government shutdown, now in its 31st day, has forced 50,000 Transportation Security Administration airport security officers to work without pay for the last month, and 10% of them failed to show up for duty ​on Sunday. (Reuters – Continue Reading)