While the Fed left rates unchanged at 3.50% to 3.75%, investors focused on the central bank’s increasingly hawkish stance. Policymakers indicated that inflation remains a priority, and markets quickly shifted from expecting rate cuts to pricing in the possibility of another rate hike later this year.

The change in expectations weighed on cryptocurrencies, with Bitcoin falling toward $65,000 and broader digital assets also moving lower after the meeting. Analysts said the reaction was driven less by the rate decision itself and more by Warsh’s communication style, which offered fewer clues about future policy moves than markets had become accustomed to under former Chair Jerome Powell.

Several factors pressured sentiment:

• Rate cut expectations faded
• Higher-for-longer interest rates returned to focus
• The US dollar and Treasury yields strengthened
• Risk assets, including crypto, came under pressure

For crypto investors, the Fed’s message was clear. As long as inflation remains above target, the central bank is unlikely to pivot toward easier monetary policy, limiting one of the biggest catalysts that had supported expectations for another crypto rally.

Related: Fed Holds Rates Steady, Signals Inflation Fight Isn’t Over

Bitcoin Falls Below $63K as Hawkish Fed Overshadows Iran Peace Optimism

Fed Chair Warsh’s First Meeting Signals a New Era for the US Central Bank

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post Kevin Warsh just killed crypto’s rate-cut trade. Here is what changes first appeared on Finblog.

The central bank left its benchmark interest rate at 3.50% to 3.75%, marking another pause after months of elevated inflation and geopolitical uncertainty. While the decision was widely expected, policymakers signaled they are prepared to keep monetary policy tight if price pressures persist.

The meeting was also significant because it was the first led by new Fed Chair Kevin Warsh, who indicated the central bank will rely less on forward guidance and place greater emphasis on incoming economic data.

Fed officials said the US economy remains resilient, supported by a solid labor market and continued economic growth. However, they acknowledged that inflation is still running above the Fed’s 2% target, with higher energy prices and supply disruptions adding to the challenge.

Markets quickly adjusted their expectations. Investors are now increasingly pricing in the possibility that another rate hike could come before the end of 2026, rather than the rate cuts many had expected earlier this year.

Following the announcement:

• US stocks moved lower
• Treasury yields climbed
• The US dollar strengthened
• Expectations for future rate cuts declined

For investors, the Fed’s latest decision reinforces a key theme that has shaped markets throughout 2026: interest rates are likely to stay higher for longer.

That means future market performance may depend less on hopes for easier monetary policy and more on whether inflation finally begins to move convincingly back toward the Fed’s target.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post Fed Holds Rates Steady, Signals Inflation Fight Isn’t Over first appeared on Finblog.

The main focus was the Federal Reserve’s policy decision, the first meeting led by Fed Chair Kevin Warsh. While markets widely expected the central bank to keep interest rates unchanged, investors were closely watching for any signals on the future path of monetary policy and whether the Fed would maintain its hawkish stance.

Attention also turned to May retail sales, a closely watched indicator of consumer spending, which accounts for roughly 70% of US economic activity. Economists expected sales to rise 0.5% after a modest increase in April, providing another snapshot of how higher prices and borrowing costs are affecting consumers.

Another report on investors’ radar was the EIA’s weekly crude oil inventory data. With oil markets reacting to developments surrounding the US-Iran peace agreement and the potential reopening of the Strait of Hormuz, the report was expected to offer fresh insight into US supply conditions and global energy demand.

Markets were watching three key events:

• The Fed’s interest rate decision and policy outlook
• US retail sales data for May
• Weekly US crude oil inventories

Together, the reports were expected to provide a clearer picture of the US economy and could influence expectations for interest rates, inflation, and financial markets in the weeks ahead.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post FOMC decision, retail sales, and oil inventories due Wednesday first appeared on Finblog.

Markets are not focused on the decision itself. They are focused on what comes next.

No Rate Cut, No Clear Direction

Forecasts suggest the Fed will keep its benchmark rate in the 3.5% to 3.75% range, continuing a wait-and-see approach.

Recent data shows a mixed picture:

• Inflation jumped to 3.3%, rising sharply from previous months
• The US added 178,000 jobs in March, showing some resilience
• But hiring remains slow and uncertain

This leaves policymakers stuck between two risks: inflation staying too high and growth slowing too much.

According to officials, there is currently no “obvious path” forward for rates.

Oil, War, and Tariffs Complicate the Outlook

The situation is being made worse by external shocks.

• Oil prices are rising sharply, driven by the Iran conflict
• Tariffs and supply chain disruptions are adding to price pressure
• Ongoing instability around the Strait of Hormuz is increasing uncertainty

These factors could keep inflation elevated for longer than expected, forcing the Fed to remain cautious.

Some policymakers are even warning about a worst-case scenario: stagflation, where growth slows while inflation stays high.

All Eyes on Powell’s Message

Investors are now waiting for signals from Jerome Powell. His upcoming press conference could be one of his final appearances as Fed Chair, making it even more important for markets.

The key question: Will the Fed prioritize fighting inflation… or protecting the job market?

His tone could shape expectations for the rest of 2026.

Leadership Transition Adds Market Uncertainty

At the same time, a major leadership change is approaching. Donald Trump has nominated Kevin Warsh to replace Powell as Fed Chair.

Warsh’s confirmation appears to be moving forward, which could lead to:

• New policy frameworks
• Changes in how the Fed communicates with markets
• A potential shift in long-term strategy

However, analysts warn that any transition could increase market volatility, especially if tensions rise over the Fed’s independence.

What It Means for Markets and Consumers

For now, stability in rates means:

• Borrowing costs remain high
• Consumers may continue facing expensive loans and credit
• Businesses may stay cautious on hiring and investment

At the same time, persistent inflation means relief is not coming quickly. The Fed is not acting… because it can’t act with confidence.

• Inflation is rising again
• Growth signals are mixed
• Geopolitical risks are intensifying
• Leadership is about to change

The result: a central bank stuck in the middle, waiting for clarity. And until that clarity comes, markets are likely to remain volatile and uncertain.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: Markets Face Crucial Week as Big Tech Earnings and Fed Decision Loom

The post No Fed rate move expected as Powell-Warsh shift looms. What to know first appeared on Finblog.

Bond markets sent a clear signal on Friday. The 10-year Treasury yield jumped to around 4.46%, its highest level in months, as investors sold off bonds and adjusted expectations for Fed policy.

From Rate Cuts to Rate Hikes

Just weeks ago, markets were expecting multiple rate cuts in 2026. Now, that view has flipped:

• No rate cuts are priced in for the next six months
• Around 20% probability of a rate hike by September
• Expectations for easing have been pushed far into the future

The shift reflects growing concern that inflation could rise again, driven largely by higher energy prices linked to the Iran conflict.

Oil and War Driving the Shift

Rising oil prices are at the center of the change in sentiment. Investors worry that:

• Higher energy costs will push inflation higher
• The Fed will be forced to keep rates elevated
• Economic conditions could tighten further

Even recent pauses in US military action have failed to calm markets, showing how sensitive investors remain to geopolitical risks.

Stocks Fall as Pressure Builds

The change in rate expectations is already hitting equities.

The Nasdaq dropped further into correction territory. The Dow also entered correction. The S&P 500 posted its longest losing streak since 2022

Higher yields are especially negative for growth stocks, adding pressure to an already weak tech sector.

Fed Faces a Tough Path

The Federal Reserve is now caught in a difficult position: Inflation risks are rising again, growth concerns are increasing, policy flexibility is shrinking

Some officials have signaled that while rate cuts are still possible, rate hikes cannot be ruled out if inflation worsens.

Markets are rapidly adjusting to a new reality: Interest rates may stay higher for longer or even move higher again.

Until oil prices stabilize and inflation pressures ease, investors are likely to remain cautious. For now, the message from markets is clear: The Fed is no longer expected to rescue stocks anytime soon.

Related: Investors Turn to New Strategy as Stocks and Bonds Fall Together

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post Markets no longer pricing in Fed rate cuts in 2026 first appeared on Finblog.

Officially, the Federal Reserve remains in easing mode. Policymakers continue to signal that rates could come down later this year, as long as inflation keeps falling. But as The Wall Street Journal points out, the mood in markets and among economists has clearly changed.

Investors are no longer confident that cuts are coming. Instead, they are starting to ask a different question: what if the Fed has to raise rates again?

The Shift in One Sentence

The story used to be simple: inflation is falling, so rates will go down.

Now it looks more like this:

• Inflation is stuck above target
• Oil prices are rising again
• Policy is already less restrictive than before

That combination is what’s changing expectations.

Inflation Is Still the Core Problem

At first glance, inflation doesn’t look alarming. But the deeper data tells a more stubborn story.

• Headline inflation is around 2.4%
• The Fed’s preferred measure is closer to 2.8%
• Core inflation is still above 3%

More importantly, key underlying categories haven’t improved much in the past year. That’s what worries policymakers.

As noted in the The Wall Street Journal analysis, the Fed had been relying on the idea that inflation would gradually cool on its own. But that process has stalled, raising doubts about whether current policy is tight enough.

Then Came the Oil Shock

Just as inflation was proving sticky, the Iran war added a new layer of risk.

Higher oil prices matter because they:

• Push up costs across the economy
• Feed into transport, food, and services
• Make it harder for inflation to fall

Normally, the Fed might ignore a temporary energy spike. But this time, the economy is still holding up, which means inflation pressure could last longer than expected.

Policy Might Not Be Tight Enough

Another important piece of the puzzle is where rates stand today.

The Fed has already cut rates significantly since 2024. Now, they are only slightly above what economists call the “neutral” level, meaning they are no longer strongly restraining the economy.

There is also a subtle but important dynamic at play:

• If inflation rises while rates stay the same → real rates fall
• Lower real rates → easier financial conditions

So even without cutting, policy may already be loosening in real terms. That’s one reason some economists think a hike could eventually be needed.

Markets Are Starting to Reflect This

You can see the shift clearly in expectations:

• Probability of a rate cut has fallen sharply
• Probability of a rate hike has risen significantly

This doesn’t mean a hike is coming soon. But it shows that investors are no longer fully convinced by the Fed’s easing narrative.

Why the Fed Is Still Waiting

Despite all this, a rate hike is not the main scenario right now.

There are still reasons for caution:

• Inflation could resume falling as temporary factors fade
• The labor market is stable, not overheating
• A prolonged war could eventually slow the economy

In other words, the Fed is not ready to react aggressively yet.

The Fed is caught in a difficult position. It wants to cut rates, but: Inflation isn’t falling fast enough, Oil prices are rising, Financial conditions are already easing

As the The Wall Street Journal highlights, the conversation is no longer just about when rate cuts will happen.

For the first time in months, the risk is that the next move might not be a cut at all.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: Fed’s Best Move Now? Do Nothing

The post Why the Fed’s Next Move Might Be a Rate Hike first appeared on Finblog.

The Federal Reserve held rates steady this week, but officials signaled that rate cuts in 2026 are no longer guaranteed as inflation risks grow.

Energy Shock Changes the Outlook

The conflict has triggered a sharp surge in energy prices:

• Brent crude jumped to around $118 per barrel, up from about $70 a month ago
• Higher energy costs are feeding inflation pressures globally

This creates a difficult environment for rate cuts, which typically require cooling inflation.

Powell Signals Uncertainty

Fed Chair Jerome Powell emphasized how unclear the situation has become.

Officials now have “no conviction” in their forecasts, as the duration of the war and its impact on prices remain unknown. The Fed is trying to stay flexible, avoiding firm guidance on future rate moves.

Rate Cut Expectations Are Fading

Recent projections show a clear shift inside the Fed:

• Fewer policymakers now expect multiple rate cuts
• Seven officials expect no rate cuts at all in 2026
• Only a small minority still supports easing

Earlier expectations for cuts are being scaled back as inflation risks rise again.

Trump Pushes for Immediate Cuts

Donald Trump has openly criticised the Fed’s decision to hold rates steady. He renewed calls for immediate rate cuts and accused Powell of being “stubborn” for not acting faster.

The Fed’s Dilemma

The central bank is facing a classic policy conflict:

• High inflation driven by energy prices
• Slowing growth and economic uncertainty

Cutting rates could support growth but risks making inflation worse, especially during an oil shock.

The war in Iran has added a new layer of complexity to monetary policy. With inflation rising and uncertainty high, the Fed’s path forward is narrowing, and for now, the message is clear:

Rate cuts are no longer a sure thing in 2026.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: Fed’s Best Move Now? Do Nothing

The post Iran War Complicates Fed Rate Cuts first appeared on Finblog.

While markets have been focused on oil prices and inflation, the ongoing Iran conflict is quietly creating deeper risks for the artificial intelligence industry. Beyond fuel costs, the war is now threatening supply chains that are essential for building chips, running data centres, and sustaining the rapid expansion of AI.

At the center of the issue is the blockade of the Strait of Hormuz, a critical global shipping route. The disruption has already pushed oil prices higher, but its impact goes far beyond energy markets. It is now affecting access to key resources like natural gas and helium, both of which are vital for semiconductor production.

A Hidden Risk: Helium and Chip Production

One of the least discussed but most critical risks is helium.

Roughly one-third of the world’s helium supply comes from Qatar, and current disruptions are making it difficult to access. Helium plays a crucial role in manufacturing semiconductors, especially advanced chips used in AI systems.

This is particularly concerning for South Korea, home to major chipmakers like Samsung and SK Hynix, which together produce more than half of the world’s memory chips. These companies rely heavily on both Middle Eastern energy and helium supplies.

If shortages persist:

• Chip production could slow
• Memory prices could rise
• Supply chain disruptions could spread across industries

From smartphones to cars, the impact would be widespread.

Data Centers Face Rising Costs

The effects do not stop at manufacturing. The data centers powering AI, already one of the most capital-intensive parts of the tech industry, are likely to face rising costs from multiple directions:

• Higher energy prices
• More expensive memory chips
• Increased infrastructure costs

Companies like OpenAI and Anthropic are already operating in a high-cost environment. Any further increase in expenses could delay expansion plans or force adjustments in pricing and investment strategies.

In short, the economics of AI are becoming more challenging just as demand continues to surge.

A Conflict With Long-Term Impact

Unlike short-lived geopolitical shocks, this situation may persist.

Iran’s strategy has focused on disrupting shipping through relatively low-cost methods, such as drone attacks, effectively slowing down global trade without direct large-scale confrontation. This has created a prolonged uncertainty around supply routes and insurance risks for shipping companies.

There is currently no clear timeline for resolution, which increases the likelihood of sustained pressure on both energy and tech supply chains.

A Turning Point for AI Infrastructure?

The situation is also accelerating discussions around how AI infrastructure should be built.

One emerging idea is the use of localized energy solutions, such as nuclear microgrids, to power data centers independently. The goal is to reduce reliance on unstable global energy markets and avoid pushing electricity costs higher for consumers.

As AI demand grows, governments may begin requiring companies to ensure that new data centers do not strain existing energy systems, potentially reshaping how and where AI infrastructure is developed.

The Bigger Picture

The Iran war is no longer just an energy story.

It is becoming a technology story, a supply chain story, and a cost structure story for one of the most important industries in the world.

For years, the AI boom has been driven by rapid investment, strong demand, and expanding capabilities. Now, it faces a new constraint: access to the physical resources that make it possible.

The global AI race is entering a more complex phase.

If disruptions continue:

• Chip shortages could worsen
• Data center costs could rise
• AI expansion could slow

If supply chains stabilize:

• The current pressure may prove temporary
• Growth could resume at full speed

For now, one thing is clear: The future of AI is no longer just about software and innovation. It is also about energy, materials, and geopolitics.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: Fed Chair Powell: I’ll stay at the Fed until…

Fed holds interest rates steady and punts on the Middle East: ‘uncertain’

Fed’s Best Move Now? Do Nothing

The post Fed Keeps Rates Steady Amid Rising Inflation: What it Means for Banks first appeared on Finblog.

The Federal Reserve held rates steady this week, and analysts say that may be the best-case scenario for markets right now.

Why a Rate Cut Could Be Bad News

Normally, lower rates help support the economy. But in the current environment, a rate cut could send the wrong signal.

• It may indicate the economy is in serious distress
• It could fuel inflation further, especially with rising energy costs
• It risks repeating past policy mistakes during supply shocks

Recent data already shows signs of weakness:

• Job growth has slowed
• Economic growth remains fragile
• Inflation is still above target

War and Oil Are Changing Everything

The war involving Iran is now a major factor shaping policy decisions.

Energy prices have surged sharply:

• Oil prices are up over 45% this month
• Gasoline and LNG costs are rising
• Fertilizer and other commodities are becoming more expensive

These increases are expected to spread across the global economy, raising costs for businesses and consumers.

Powell: “Nobody Knows”

Fed Chair Jerome Powell acknowledged the uncertainty around the situation.

“The thing I really want to emphasize is that nobody knows,” Powell said, referring to how the war and energy shock could impact inflation.

The Fed’s Dilemma

The central bank is stuck between two risks:

• Cut rates → could worsen inflation
• Hold rates high → could slow growth further

For now, the Fed is signaling patience, projecting just one possible rate cut later in 2026.

Markets may hope for rate cuts, but in today’s environment, that may not be good news. With inflation rising and global uncertainty increasing, the Fed’s safest strategy may be simple:

Wait, watch, and do nothing, at least for now.

Related:

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post Fed’s Best Move Now? Do Nothing first appeared on Finblog.

The Federal Reserve kept interest rates unchanged at 3.5%–3.75%, marking its second straight pause, as policymakers confront a deeply uncertain economic environment shaped by the Iran war, rising energy prices, and slowing hiring.

The decision was widely expected. The message behind it was not.

A Central Bank Stuck Between Two Risks

The Fed’s challenge is becoming increasingly clear.

Inflation is moving higher again, driven largely by surging oil prices linked to the Middle East conflict. At the same time, the labour market is losing momentum, with job gains slowing sharply and unemployment hovering around 4.4%.

This creates a rare situation where both sides of the Fed’s mandate are under pressure.

The central bank acknowledged this directly, noting that the economic impact of developments in the Middle East remains “uncertain” and that risks exist on both inflation and employment.

Inflation Rising, Fueled by Energy and AI

New projections show the Fed expects:

• Core inflation (2026): 2.7%, up from 2.5%
• Producer prices rising faster than expected
• Continued pressure from energy costs and tariffs

Powell warned that:

“Near-term higher energy prices will push up overall inflation.”

He also pointed to another, less discussed factor:

AI investment and data center expansion may be contributing to inflation pressures and pushing the neutral rate higher.

This suggests that both geopolitics and technological investment are now influencing the inflation outlook.

Rate Cuts Still on the Table, But Less Certain

The Fed did not change its long-term rate path:

• 1 rate cut projected in 2026
• Another in 2027
• Neutral rate raised to around 3.1%

But internally, divisions are growing. One Fed governor, Stephen Miran, dissented in favour of a rate cut, while others are increasingly concerned that inflation will remain elevated. Some policymakers are no longer ruling out future rate hikes if price pressures intensify.

Powell made the Fed’s stance clear:

“If we don’t see inflation progress, we won’t see the rate cut.”

Labor Market Shows Signs of Weakness

While inflation is rising, the job market is not providing reassurance. Recent data showed:

• A loss of 92,000 jobs in February
• Hiring momentum slowing significantly
• Ongoing concerns about weak job creation

Powell acknowledged the risk:

“The labor market does have a feel of downside risk.”

However, he pushed back on more extreme concerns, stating:

“This is a very difficult situation, but it’s nothing like what we faced in the 1970s.”

War Adds a New Layer of Uncertainty

The Iran conflict is now a central factor in Fed decision-making. Oil prices have surged, with crude jumping sharply since the war began, effectively acting as both:

• An inflation driver
• A drag on economic growth

Higher energy costs reduce consumer spending power while also increasing prices across goods and services, making policy decisions even more complex.

Political Pressure and Leadership Uncertainty

The Fed is also facing increasing political tension. President Donald Trump has repeatedly pushed for aggressive rate cuts, while Powell has resisted. At the same time, legal pressure has emerged, including an investigation into Powell related to Fed renovations.

Powell confirmed he has:

• No intention of leaving the Fed board
• Plans to stay until the investigation is resolved
• Will remain as interim chair if a successor is not confirmed

With his term ending in May and Kevin Warsh awaiting Senate approval, leadership uncertainty is adding another layer of complexity to an already fragile situation.

The Bigger Picture

The Fed is no longer operating in a predictable cycle. Instead, it is navigating a system where:

• War is driving oil prices
• Oil is driving inflation
• Inflation is shaping policy
• Policy is influencing markets

At the same time, structural forces like AI investment are beginning to influence long-term rate expectations. The Federal Reserve is on hold, but not because conditions are stable. It is on hold because:

• Inflation is rising again
• The labor market is weakening
• The global environment is unpredictable

For now, the Fed is waiting for clarity. But as Powell made clear, the path forward depends on one key factor: Whether inflation finally comes down or stays elevated in a world shaped by war, energy shocks, and structural change.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: Fed’s Best Move Now? Do Nothing

Fed Keeps Rates Steady Amid Rising Inflation: What it Means for Banks

The post Fed holds interest rates steady and punts on the Middle East: ‘uncertain’ first appeared on Finblog.