An unusually divided Federal Reserve on Wednesday held its key interest rate steady as policymakers grappled with the policy impact of persistent inflation and awaited a looming leadership transition at the central bank.

In what may have been Chair Jerome Powell’s final meeting at the helm, the rate-setting Federal Open Market Committee voted to hold the benchmark funds rate in a range between 3.5%-3.75%. Markets had been pricing in a 100% chance of no change.

However, the meeting saw a dramatic turn amid a groundswell of officials who opposed messaging that further rate cuts could be ahead.

Amid expectations for a routine vote to hold the benchmark funds rate steady, the Federal Open Market Committee instead was split along 8-4 lines, with officials expressing different reasons for their vote. (CNBC – Continue Reading)

Euro area central bankers are widely expected to leave key interest rates unchanged Thursday amid mounting evidence that the Iran war is driving consumer costs higher as it undercuts economic growth.

Traders and economists agreed that any policy action from the public lender will come at the next decision-making meeting of the European Central Bank in six weeks, with both calling for a 25 basis-point hike at that juncture.

Preliminary data for April Eurozone annual inflation and Q1 GDP are due just hours before the ECB is set to announce its decision, and neither data point is likely to garner applause at the bank’s headquarters in Frankfurt. An economists’ poll said headline annual price growth this month is expected to rise three-tenths to 2.9%, which would be the highest mark since the end of 2023 and nearly a point more than the central bank’s target of 2% over the medium term. Euro area economic growth is forecast at 0.2% q/q, with the first month of the war – March – part of the mix. (LiveSquawk – Continue Reading)

All week, central banks have struck a broadly similar tone: caution amid heightened uncertainty. Economists anticipate much the same from the Bank of England.

Following a two-day meeting, the BoE’s Monetary Policy Committee is widely expected to keep its Bank Rate unchanged at 3.75% when it delivers its decision at midday on Thursday.

Recent commentary suggests an 8–1 vote split in favour of a hold, with the bank’s chief economist, Huw Pill, the likely lone dissenter, voting for a quarter-point hike.

On bank guidance, Bruna Skarica of Morgan Stanley expects a message centred on uncertainty and a readiness to act should second-round effects emerge. “On balance, we see more focus on trade-offs than in March. We see the BoE on hold through this year,” she said. (LiveSquawk – Continue Reading)

Iran’s proposed interim ceasefire deal, which would reopen the Strait of Hormuz while postponing nuclear talks, has been met with little enthusiasm in Washington, according to the latest reports. That is pushing markets back into a higher-uncertainty regime, with oil prices staying well-supported.

In theory, this should be a favourable environment for the dollar, yet USD has found only limited support so far. We see two reasons. First, US equities continue to show remarkable resilience, and corrections in RoW stock markets have also not been dramatic. That remains a key missing link for a sustained dollar rally; EUR/USD, like many other USD crosses, currently shows a higher beta to global equities than to oil prices or rate differentials. Second, month‑end flows should be acting as a drag on the dollar, given relative US equity outperformance in April. (ING – Continue Reading)

The Iran war has already cost the Pentagon $25 billion, a top Defense Department official said Wednesday, providing the first official price tag for a U.S. military campaign with little public support that has stretched two months.

Acting Pentagon comptroller Jules Hurst gave the figure during a House Armed Services Committee hearing alongside Defense Secretary Pete Hegseth and Joint Chiefs chair Gen. Dan Caine on the department’s budget. It’s the most specific number the Trump administration has attached to an effort that, despite a recent ceasefire, has no clear end.

“Approximately [to] this day, we’re spending about $25 billion on Operation Epic Fury, most of that in munitions,” Hurst said. “There is part of that, it’s obviously [operations and maintenance] and equipment replacement.” (POLITICO – Continue Reading)

S&P Global Ratings reviewed its hydrocarbon price deck and raised its WTI and Brent oil price assumptions by $15/bbl for the remainder of 2026 and $5/bbl for 2027. Our 2026 assumptions are now $95/bbl for WTI and $100/bbl for Brent, reflecting the longer‑than‑expected persistence of supply disruptions and the cumulative effect of lost and damaged supply. Our 2027 assumptions are now $70/bbl for WTI and $75/bbl for Brent.

Our assumptions for 2028-2029 WTI and Brent prices remain unchanged. Our Henry Hub, AECO, and TTF natural gas price assumptions for 2026-2029 are also unchanged. (S&P – Continue Reading)