New Federal Reserve Chair Kevin Warsh has a message for his fellow central bankers: You talk too much. Indeed, a change has already come to Federal Open Market Committee (FOMC) communications with the first monetary policy statement under his leadership.

But policymakers of that kind of prominence are public figures. That's just the way it is in the information age.

And Warsh knows as well as anyone that, as the 20th century bridged the 21st, Alan Greenspan established a model for the modern Fed chair, under chief executives of both parties, for better and for worse.

The new Fed chair wants "regime change." But he's confronting the work of an old Fed chair who remains an icon on Wall Street and whose legend trickles down even to Main Street.

Greenspan, who was the top policymaker at the world's most important central bank from 1987 until 2006, died on Monday at 100 years old.

Nominated by Ronald Reagan, he led the Federal Reserve under four presidents, through historic macroeconomic and geopolitical events, and was there longer than anyone but William McChesney Martin.

George H.W. Bush nominated him again in August 1991. Bill Clinton did it twice, in February 1996 for a third term and January 2000 for a fourth. George W. Bush nominated him for his fifth and final term in May 2004.

A lot has changed in the 20 years since Greenspan left the Fed. But Ben Bernanke, Janet Yellen and Jerome Powell stayed communicative throughout. And they stuck hard to the main objective: to stabilize the system.

Greenspan is survived by his wife of 29 years, the journalist Andrea Mitchell of MSNBC, with whom he formed one of the most prominent power couples of the era.

Here are five lessons we can learn from Fed Chair Alan Greenspan, a modern central banker of broad and deep experience.

1. Fedspeaking in tongues

Use your words… to the best of your ability… for the purpose you have defined.

"Since becoming a central banker," he testified to Congress in September 1987, "I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said."

It's a little bit ironic, but Greenspan instilled confidence, despite himself.

There's no question the guy was clever. And he certainly understood rhythm and timing. In his performance, Greenspan demonstrated a real grasp of where the science and the humanity of economics meet.

His actions during the dot-com era and the housing boom-bust cycle that followed suggest maybe he was a little too clever.

Something you may not know, however, is that Greenspan's Ph.D. thesis, which was compiled from some of his previously published articles and was withheld from the public at the author's request when he joined the Fed board, highlighted the impact of higher housing prices on consumer spending.

2. Black Monday

Be ready on Day One.

Little more than two months into his new order, shortly after taking his oath on August 11, 1987, Greenspan was forced to manage Black Monday, when the Dow Jones Industrial Average fell 22.6%.

That's still the biggest single-day decline in Papa Dow's 130-year history.

From October 19, Greenspan guided Washington, D.C., Wall Street and Main Street into a historic rally and an economic boom that lasted, almost uninterrupted, through the 1990s.

The Dow recovered 288 points and regained more than 57% of its Black Monday loss within two trading sessions. Papa Dow posted a 0.6% gain in 1987, and it got back to its pre-crash all-time high within 23 months, by September 1989.

3. Fed man in the bathtub

Take a bath.

Later, in December 1996, he wondered, "But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions," as the dot-com era unfolded.

Now, here's the rest of the story, as told by the late Fed chair himself in his 2007 memoir "The Age of Turbulence: Adventures in a New World":

The concept of irrational exuberance came to me in the bathtub one morning as I was writing a speech. To this day, the bathtub is where I get many of my best ideas. My assistants have gotten used to typing from drafts scrawled on damp yellow pads–a chore that got much easier once we found a kind of pen whose ink doesn't run. Immersed in my bath, I'm as happy as Archimedes as I contemplate the world.

4. Everybody wants to rule the world (but few are chosen)

And you have to be flexible.

Greenspan, Treasury Secretary Robert Rubin and Treasury Deputy Secretary Larry Summers famously formed what Time magazine called the "committee to save the world" in February 1999.

Indeed, it was like they had the whole planet on their back, like the main character in the main work of Greenspan's favorite author, Ayn Rand, who celebrated Atlas and warned what would happen should he shrug.

Greenspan was an objectivist committed to hard-and-fast free market principles when he was tapped to chair the White House Council of Economic Advisors by President Gerald Ford in 1974.

By the time he was perhaps the key figure in the "age of turbulence," Greenspan was an activist focused on practical means to stabilize an ever-more complex global financial system.

5. The accountant from Ipanema

Know who you are.

Bob Woodward of The Washington Post titled his 2000 biography "Maestro: Greenspan's Fed and the American Boom."

Woodward's book was published well before Greenspan stepped away from the central bank in 2006. It also preceded the global financial crisis/Great Recession of 2007-09, a series of events that earned Greenspan another nickname, "Mr. Bubble," bestowed upon him when he no longer held any real power.

For a long time, though, Greenspan seemed to conduct financial markets and global economic activity.

"Maestro" was also a nod to Greenspan's career as a jazzman. Before he saved the world in the '90s, the future central banker played with Stan Getz and Woody Herman in the '40s. He even attended Juilliard in 1943-44.

Greenspan, who was actually from the Washington Heights neighborhood of New York City, realized he was a better bean-counter than sax-player, so he started keeping his band's books.

Held back from serving in the military during World War II because of a spot on his lung, the son of a single mother earned B.A. and M.A. degrees in economics from the New York University Stern School of Business in 1948 and 1950, respectively, and completed his Ph.D. in 1977.

As the global financial crisis devolved into the Great Recession, investors, traders, speculators and consumers started to wonder whether we need less "superhero" in our central bankers and more supervision from them.

Certainly, though, what Greenspan leaves is a worthy demonstration that a whole lot of competence and little likability can go a long way.

Related content

• 3 Ways Kevin Warsh Will Change the Fed
• Fed Zeppelin: 5 Songs That Explain the Biggest Central Bank in the World
• June Fed Meeting: Updates and Commentary

The June Fed meeting concluded on Wednesday June 17, with the central bank's latest policy decision.

With energy prices still high and inflation accelerating, the Federal Reserve unanimously voted to keep the federal funds rate unchanged this time around.

Wall Street was also tuned into new Fed Chair Kevin Warsh's post-meeting press conference, where he unveiled new changes that are coming to the central bank.

The Kiplinger team reported on the June Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Scroll for the latest updates.

How Does the Federal Reserve Work? | 3 Ways Kevin Warsh Will Change the Fed | How the New Fed Chair Could Impact What You Pay in Taxes this Year

Fed meeting schedule for 2026

The next Fed meeting, which runs from June 16 through June 17, marks the fourth gathering of 2026.

"The committee meets eight times a year, or about once every six weeks," explains Kiplinger contributor Dan Burrows.

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm, though this could change under Warsh's leadership.

Here is the full remaining Fed meeting schedule for 2026:

June 16 to 17

July 28 to 29

September 15 to 16

October 27 to 28

December 8 to 9

The stock market is trading higher to start Fed week

Stocks are solidly in positive territory on Monday as market participants cheer signs of potential peace in the Middle East.

Over the weekend, Pakistani Prime Minister Shehbaz Sharif announced on X "that the Peace Deal between the United States of America and Islamic Republic of Iran has been REACHED." President Donald Trump later confirmed the news.

At last check, the blue-chip Dow Jones Industrial Average was up 1% at 51,928, the broader S&P 500 was 1.9% higher at 7,573, and the tech-heavy Nasdaq Composite had gained 3% to 26,667.

Over in the bond market, the yield on the 2-year Treasury note is down 3.3 basis points at 4.052%, and the 10-year Treasury yield is off 2.4 basis points at 4.461%.

- Karee Venema

Who is Kevin Warsh?

On May 13, the Senate voted 54-45 to confirm Kevin Warsh as the new Federal Reserve chair, replacing Jerome Powell, who had served in that position since 2018.

But who is Kevin Warsh?

Warsh previously served on the Federal Reserve Board from February 2006 through March 2011. He was Fed Chair Ben Bernanke's right-hand man during the 2008-09 global financial crisis and was his primary liaison to Wall Street, which earned him credibility he still retains.

Before his time at the Federal Reserve, Warsh was special assistant to the president for economic policy and executive secretary of the White House National Economic Council from 2002 through 2006, during the George W. Bush administration. From 1995 to 2002, Warsh worked for Morgan Stanley.

Prior to being confirmed as Fed chair, Warsh was a visiting fellow in economics at Stanford University's Hoover Institution, a lecturer at the Stanford Graduate School of Business and a member of the Panel of Economic Advisers of the Congressional Budget Office.

He is widely viewed as a "hawk" on monetary policy who generally favors higher interest rates rather than the risk of inflation.

At the same time, Warsh, who was said to be a candidate for Treasury secretary before Trump picked Scott Bessent, was on the short list because he has a great relationship with the president.

Warsh said in mid-2025 that "the independent operations in the conduct of monetary policy is essential," adding "that doesn't mean the Fed is independent in everything else it does."

Though he consistently took the hawkish line on inflation during his time inside the central bank, Warsh has more recently advocated for lower interest rates.

Read more: The New Fed Chair Was Announced: What You Need to Know

- David Dittman

Who gets to vote at the June Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2026 FOMC voting committee consists of:

Fed Chair Kevin Warsh

Vice Chair Philip Jefferson

Fed Governor Michael Barr

Fed Governor Michelle Bowman

Fed Governor Lisa Cook

Fed Governor Jerome Powell

Fed Governor Christopher Waller

New York Fed President John Williams

Cleveland Fed President Beth Hammack

Minneapolis Fed President Neel Kashkari

Dallas Fed President Lorie Logan

Philadelphia Fed President Anna Paulson

In 2027, the presidents from Chicago, Richmond, Atlanta and San Francisco will rotate in as FOMC voting members, according to the Federal Reserve.

- Karee Venema

What Kiplinger economist David Payne is expecting at this week's Fed meeting

Wednesday will be Kevin Warsh's first monetary policy meeting since taking over the chairmanship of the Federal Reserve from Jerome Powell in May. It is not likely that there will be any changes in rates.

The decline in crude oil prices following the agreement to stop the U.S.-Iran war is welcome news for Warsh and the Fed, but it will not be enough for the new chair to persuade his fellow committee members to cut. For the moment, at least, the agreement likely prevents any move to fight inflation by increasing short-term interest rates.

- David Payne

May CPI came in hot as energy prices kept climbing

The Bureau of Labor Statistics (BLS) released the May Consumer Price Index (CPI) report last Wednesday and it confirmed that energy prices continue to boost inflation.

According to the BLS, headline inflation was up 0.5% from April to May and 4.2% higher than the year prior. The monthly increase was slower than the 0.6% rise seen in April.

The annual rise signaled an uptick from the 3.8% increase from the month prior and was the highest yearly pace since April 2023. Both figures matched economists' estimates.

"The index for energy rose 3.9 percent in May, after rising 3.8 percent in April and 10.9 percent in March. The energy index accounted for over sixty percent of the monthly all items increase," wrote the BLS in its report.

Core CPI, which excludes volatile food and energy prices, was up 0.2% month over month, a downshift from April's 0.4% increase and slower than economists expected. Year over year, core inflation was 2.9% higher, slightly faster than the 2.8% increase from the year prior and in line with estimates.

Prices for airfare, medical care and recreation were all higher in May, while costs for new cars, household furnishings and car insurance were lower.

Ahead of the June Fed meeting, many are wondering if higher inflation readings mean the central bank's next move will be a rate hike.

But Skyler Weinand, chief investment officer at Regan Capital, doesn't see that happening any time soon. "It's clear that rate cuts are off the table, and while there is chatter about a potential rate hike, we believe it's unlikely that we'll see a rate hike before the midterm elections, and any such hike is likely a year away," he says.

Read more: May CPI Shows Inflation Rose at Its Fastest Pace in 3 Years

- Karee Venema

Iran peace deal has big implications for the Fed

Stocks are starting Fed week on a positive note thanks to news that the U.S. and Iran have agreed to a potential peace deal.

Daniela Hathorn, senior market analyst at Capital.com, says the deal has "major implications" for global central banks, given that higher oil prices have accelerated inflationary pressures — and have led many to believe the next moves from policymakers will be tightening rather than easing.

Indeed, CME FedWatch shows that futures traders aren't pricing in any rate cuts this year. At the start of 2026, many folks were anticipating at least two quarter-point rate cuts by December.

And while the recent decline in oil prices "does not eliminate inflation risks altogether," says Hathorn, "it does reduce some of the urgency surrounding them."

And while the Federal Reserve is likely to maintain a cautious stance this time around, the peace deal may give policymakers "greater flexibility to maintain a neutral stance rather than immediately leaning toward further tightening," she adds.

Hathorn believes Fed Chair Warsh's messaging "could prove critical," as markets look "for clarity on whether the Fed views current inflation pressures as temporary and manageable, or whether policymakers still see a need for tighter policy later in the year."

- Karee Venema

The June Fed meeting is historic, but will not bring fireworks, says Johnson Investment Counsel's chief economist

Kevin Warsh's first meeting as head of the Federal Open Market Committee (FOMC) will be "notable from a historic perspective," says Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel, considering he is just the 17th person to serve as Fed chair since the Federal Reserve was created in 1914.

But, Zureick adds, "the meeting itself is unlikely to produce substantive policy changes. The FOMC is widely expected to leave interest rates unchanged, extending the 'wait and see' approach it adopted earlier this year."

The economist will be watching to see if the Fed uses "this meeting to move away from its prior bias toward future rate cuts, reflecting a shift in its assessment of both inflation and the labor market."

While Zureick notes that higher energy prices have increased upward pressure on inflation, "labor market data has improved somewhat, reducing the urgency for additional policy easing." As such, the FOMC could decide that its most prudent course of action is to leave rates unchanged.

"Investors should pay close attention to any changes in the official FOMC statement, particularly language around 'the extent and timing of additional adjustments' to the federal funds rate," he adds.

The economist also points to the importance of the Fed's Summary of Economic Projections (SEP), particularly the dot plot. "When it was last revised in March, the median FOMC forecast still pointed to two additional rate cuts in 2026 — a path that may no longer reflect the Committee's current thinking," Zureick explains. "Instead, investors will need to look to the 2027 median projection for clues about the Fed's desired path for rates beyond this year."

Fed Chair Warsh is likely to encounter a wide range of questions, he says. "While reporters will likely press for clues about how policy may evolve under his leadership, Warsh is unlikely to reveal much. Instead, he will probably emphasize the Fed’s data-dependent approach and the need to preserve flexibility amid an uncertain inflation and growth outlook."

- Karee Venema

What Thrivent's CFO and CIO is watching for in Chair Warsh's first press conference

David Royal, chief financial officer and chief investment officer of Thrivent says Kevin Warsh's first press conference as Fed chair will give us insight into several things, including his policy framework and communication style. It will also show us "how he intends to lead the institution through a complex inflation, labor and rate environment."

Here are five things Royal will be watching for in the press conference:

1. How does Chair Warsh frame the inflation picture? "If he describes inflation as broadening beyond energy, that would read as hawkish. Core goods inflation has been flat for the last two months. If he simply notes that fact, it would be dovish, but if he attributes it to the tariff rollback (and especially if he observes that the rollback is a one-time effect), that would be hawkish as it would imply core inflation may rise due to underlying economic factors in coming months."

2. What does he say about forward guidance and the Summary of Economic Projections (SEP or "dot plot")? "Warsh has long been skeptical of forward guidance. The key question is whether he simply wants less of it or whether he is signaling a broader rethink of how the Fed communicates policy. I'll also be watching whether he sounds dismissive of the SEP and dot plot, even if he stops short of criticizing them directly. The dot plot still matters, especially if it points to a more neutral or even hawkish stance than markets currently expect."

3. What is Chair Warsh's communication style? "If Warsh is more terse than recent Fed chairs, markets will need to decide whether that reads as discipline or evasiveness. That distinction could matter for term premium and market confidence. His tone may also offer an early signal of whether he intends to lead as a consensus builder or as a reformer."

4. What does he say about Fed independence? "He is almost certain to get a question on Fed independence, and the strength of his response will matter. I'll be listening for whether he offers a routine defense of independence or signals a deeper personal commitment to it. Any sign of a weaker commitment could raise concerns in the Treasury market."

5. What does Chair Warsh say about the Fed's balance sheet? "Warsh has been outspoken about shrinking the balance sheet, so I'll be watching how directly he addresses quantitative tightening in his opening comments and Q&A. The bigger question is whether he sees balance sheet policy and interest-rate policy as separate tools or as moves that should be coordinated."

- Karee Venema

Stocks close higher ahead of the June Fed meeting

Stocks jumped out of the gate and stayed higher through the close as market participants cheered news of potential peace in the Middle East. Oil prices, meanwhile, cratered as reports of a deal to end the months-long war circulated, though the Federal Reserve is still likely to stay on hold at this week's meeting.

Front-month West Texas Intermediate crude futures tumbling 4.9% to $80.75 per barrel — their lowest settlement since early March.

As for stocks, the blue-chip Dow Jones Industrial Average was up 0.9% at 51,671 — a new record closing high — the broader S&P 500 was 1.7% higher at 7,554, and the tech-heavy Nasdaq Composite had jumped 3.1% to 26,683.

Read more: Dow Hits New High on Iran Deal: Stock Market Today

Futures show mixed open on first day of Fed's Warsh era

Equity index futures pointed to a mixed open on Tuesday, the first day of the first FOMC meeting under new Fed Chair Kevin Warsh. Stocks rallied on Monday after the U.S. and Iran appeared to reach an agreement that would open the Strait of Hormuz by Friday.

The 2-year Treasury yield, a proxy for short-term Fed policy on interest rates, ticked up to 4.066% from 4.064% on Monday. The 2-year yield was 3.990% on May 13, the day Warsh was confirmed by the Senate to succeed Jerome Powell as Fed chair.

The front-month West Texas Intermediate crude oil futures contract was down another 4% to around $76 per barrel early Tuesday after sliding almost 5% on Monday.

WTI rose from $67.02 on February 27, the day before hostilities in the Middle East began, to an intraday wartime peak of $119.48 on March 9.

Easing pressure from an energy shock will make Warsh's job a lot easier, with May data showing consumer inflation at a three-year high and producer prices at nearly four-year highs.

– David Dittman

Original 'Fed Whisperer' still doing his thing

Jon Hilsenrath was the first "Fed whisperer," a title he earned during a 26-year career at The Wall Street Journal covering the central bank and other economic and financial beats.

Hilsenrath is now a visiting scholar at Duke University, where he's still doing his Fed thing by collaborating with the economics department on a survey of former officials and staffers ahead of each FOMC meeting.

The one conducted between June 5 and June 12 included 34 former officials and staff members: six former board governors, six former regional bank presidents, and 22 former staff members from the board and regional banks.

Half of them think new Fed Chair Kevin Warsh may have to raise interest rates before the end of 2026.

Indeed, 17 of 32 former officials and staff who offered projections said an increase would likely be appropriate in 2026. Fourteen said no increase would be appropriate, and one person said the central bank should cut the federal funds rate.

"The survey panel foresaw little progress reducing inflation in the months ahead," the report said (pdf). "Already-elevated inflation was compounded by higher energy prices associated with conflict in the Persian Gulf."

The median estimate for year-end inflation based on forecasts provided by Hilsenrath's panel of former Fed officials for the Personal Consumption Expenditures Price Index (PCE) was 3.5%.

The Fed's policy target is 2%. Headline PCE printed at 3.8% last April.

– David Dittman

Papa Dow makes more new highs as Fed meeting opens

The Dow Jones Industrial Average traded up to a new all-time high on an intraday basis on the first day of the first FOMC meeting with new Fed Chair Kevin Warsh in charge.

Papa Dow was up 360 points, or 0.7%, as of late morning. The S&P 500 was down about 0.2%, while the Nasdaq Composite had shed 0.4%.

Both the front-month West Texas Intermediate crude oil futures and the Brent crude oil futures contracts were down about 4%, with WTI trading below $80 per barrel for the first time since March.

The 2-year Treasury yield was down to 4.060% vs 4.064% on Monday, as markets continue to price the implications of a Middle East peace deal.

As Deutsche Bank analyst Henry Allen notes of Brent crude, the futures curve is normalizing as longer-dated contracts move more in line with the front-end price.

“In other words," Allen explains, "investors are no longer pricing a sharp fall in oil prices over the next six months, as that was predicated on an agreement that’s now been announced.”

– David Dittman

Lawyer up: What Kevin Warsh and Jerome Powell have in common

Former Fed chair and current board member Jerome Powell was notable upon his nomination for the top job in 2017 for not being an academic economist.

In the early days of the world's most important central bank and through most of the 20th century, it was common for its leaders to have legal backgrounds before taking on the monetary policy-making role.

From the late 1970s, beginning with Paul Volcker, continuing with Alan Greenspan and including Ben Bernanke and Janet Yellen, it was all economists.

That is until President Donald Trump nominated Powell. Like Powell, new Fed Chair Kevin Warsh has a J.D., from Harvard Law School, no less, and is not an academic economist.

Whether a president widely considered the most litigious in U.S. history (in public and private) intended to put his bulldog in front of a central bank staff still heavy with PhDs is an open (and interesting) question.

For sure, though, Warsh will know how to marshal evidence and advocate for lower interest rates.

– David Dittman

'There's a lot at play' for Kevin Warsh

Kathleen Hays is a former economics reporter for Bloomberg, CNBC and CNN and is the current editor-in-chief of Central Bank Central.

Dennis Lockhart is the former president of the Federal Reserve Bank of Atlanta. His tenure at the Atlanta Fed overlapped with new Fed Chair Kevin Warsh's term on the Fed board from 2006 to 2011.

Today, Hays published an interview with Lockhart about Warsh and what he's looking for from Jerome Powell's successor amid his first FOMC meeting in charge of the central bank.

“Kevin, in my experience, which is four years of overlap, really was quite conservative in the sense that he feared the consequences of the balance sheet growth,” Lockhart told Hays. “He was an inflation hawk and I think was a big believer and respecter of Fed traditions and the modes of operation."

He also said Warsh will “work hard to be a consensus builder and collaborate with his colleagues.”

According to Lockhart, "The next few months will play out in a way that tells us whether inflation is going to be persistent above target or disinflation is going to resume, but it’s far from certain that prices are going to be restored to prewar levels.”

The former central banker says it's "probably far from certain that the Strait of Hormuz will operate the way it did pre-war," adding that the Iranians may continue to try to leverage their position.

Lockhart and Hays also talk about the Fed's independence. "So I think there’s a lot at play," Lockhart concludes, "much of which is not susceptible to monetary policy as a solution."

– David Dittman

A former Fed staffer talks about the new Fed chair's 'good family fight'

Claudia Sahm is a former Fed staffer who writes about central banking and other things that matter to the economy, working people and investors at Stay-At-Home-Macro.

(That's S-A-H-M, as in "Sahm," and speaking as a wordsmith who loves acronyms, that's clever…)

Today, of course, Sahm is previewing the in-progress Fed meeting ahead of tomorrow's anticlimactic decision on interest rates.

"The Fed faces a genuine challenge," she writes. "Inflation is rising, driven largely by an energy supply shock — and the textbook response to a supply shock is to look through it, since rate hikes can't fix a shortage and only squeeze families already paying more."

At the same time, inflation has been running above the Fed's 2% target for five years. As Sahm explains, more and more Fed officials think a half-decade of hot inflation "changes the calculus," and it amounts to "a real disagreement, not noise."

Sahm says the Summary of Economic Projections (SEP) and the dot-plot – "the one public window into the debate" – may show a hawkish shift, and she cites a survey of former Fed officials and staff we talked about earlier today indicating that kind of movement.

"The risk is that new Fed Chair Kevin Warsh, a longtime skeptic of the Fed's forecasts, might decline to submit his own dots or play down the SEP," Sahm says. "That would draw less attention to the dots — but it would also mask the range of views just as that range becomes the story."

As Sahm concludes, "Warsh says he wants a 'good family fight' on the committee. The dot plot is how the rest of us see it. Improve it, don't bury it."

– David Dittman

Fed Zeppelin: when whisperers aren't loud enough

Nick Timiraos of The Wall Street Journal, who has inherited Jon Hilsenrath's title as "Fed whisperer," writes about new Fed Chair Kevin Warsh and how he might change the way the central bank communicates with the public in his preview of this week's FOMC meeting.

"For more than a decade," Timiraos notes, "Warsh has argued that the Fed should say less. How much a central bank reveals about its thinking shapes mortgage rates, markets and the cost of borrowing for everyone."

Naturally, he concludes, "Wall Street will parse Wednesday's meeting, his first as Fed chairman, for any sign of where he'll take it." Indeed, that Warsh is holding a press conference tomorrow is significant.

Perhaps, though, instead of a bunch of "Fed whisperers" to describe things like this potential communication breakdown, the thing we really need right now is the "hammer of the gods."

Here are five Led Zeppelin songs that explain the biggest central bank in the world right now.

– David Dittman

Stocks are mixed on the first day of the June Fed meeting

The Dow Jones Industrial Average closed at a new all-time high, rising above 52,000 for the first time, but tech stocks slumped and weighed on the S&P 500 and the Nasdaq Composite during the first day of the first FOMC meeting with new Fed Chair Kevin Warsh in charge of the world's most important central bank.

The 2-year Treasury yield ticked down to 4.056% from 4.064% on Monday, and the front-month West Texas Intermediate crude oil futures contract was down 4%, finishing below $80 per barrel for the first time since March 4.

"Tomorrow," writes Louis Navellier of Navellier & Associates, "we get to hear Kevin Warsh's first comments as the new head of the Federal Reserve, when the FOMC releases its rate decision. If he's perceived as more dovish than expected, it should be bullish for stocks. If he's hawkish, it could bring volatility."

As Navellier notes and CME FedWatch confirms, there's almost zero chance the Fed cuts interest rates tomorrow. "Perhaps more interesting," he adds, "will be what he wants to do with the Fed's balance sheet."

Read more: Dow Notches New High as Tech Stocks Drop: Stock Market Today

Stock futures are mixed ahead of today's Fed announcement

Stock futures are signaling a mixed open ahead of this afternoon's policy announcement from the Federal Reserve.

At last check, futures on the Dow Jones Industrial Average are marginally lower, while premarket gains in several tech stocks have futures on the S&P 500 trading up 0.2% and futures on the Nasdaq-100 trading 0.6% higher.

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time today, June 17.

"Recent indicators suggest that economic activity has been expanding at a solid pace," the FOMC wrote in its April policy statement. "Job gains have remained low, on average, and the unemployment rate has been little changed in recent months. Inflation is elevated, in part reflecting the recent increase in global energy prices."

The committee went on to say that "developments in the Middle East are contributing to a high level of uncertainty about the economic outlook."

As such, the FOMC voted to keep the federal funds rate unchanged at its current range of 3.5% to 3.75%.

This time around, Deutsche Bank economists expect the June FOMC statement to reflect improvements in the labor market and remove any bias toward easing, reflecting Chair Warsh's disapproval of forward guidance.

"While it is possible that Warsh could look to scrap the guidance language entirely, given his prior criticisms of the Fed's over-reliance on forward guidance, we expect change to come more incrementally, given that a rising chorus of the Committee wishes to signal the potential for monetary tightening amidst ongoing elevated inflation concerns," they note.

They anticipate the removal of the "extent and timing of additional adjustments" language, with this more neutral revision: "In considering any adjustments to the level of the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”

- Karee Venema

May retail sales came in higher than expected

Retail sales came in higher than expected in May. According to the Census Bureau, retail sales rose 0.9% month over month, much higher than economists' estimate for a 0.6% increase.

It was also an improvement over April's retail sales, which were downwardly revised to +0.4% from the initial reading of +0.5%.

"Nominal retail sales rose again in May despite the weakness in consumer sentiment and higher energy prices," says Richard de Chazal, macro analyst at William Blair. "The resiliency is a function of a labor market that remains structurally tight, equity markets that continue to hit new highs (generating a wealth effect), a very strong tax refund season, and household cash levels as a share of total assets that are exceptionally high."

But de Chazal adds that consumers view the war in Iran as temporary, which has not impacted demand. "However, should the Strait of Hormuz remain closed much longer, the current memorandum of understanding not be agreed upon, or indeed the conflict escalate into other major global choke points, prices would rise further and more tangible demand destruction would be likely."

- Karee Venema

How well do you know the Fed?

Fed meetings have become key events as central bank officials try to balance high inflation and labor market hiccups against the White House's desire for lower interest rates.

But how well do you know the Fed?

With the next Fed meeting on deck, we decided to test your basic knowledge of the Federal Reserve with a quick quiz.

Master Your Fed Knowledge: Take Our Quick Federal Reserve Quiz

What time does Kevin Warsh speak today?

Fed Chair Warsh will host a press conference at 2:30 pm Eastern Standard Time today, June 17.

How Warsh frames answers to key market questions surrounding inflation, AI and the future path of interest rates during his press conference is more important than today's policy statement, says Gargi Chaudhuri, chief investment and portfolio strategist, Americas at BlackRock.

"Investors will be listening closely for his views on whether policymakers should look through tariff and energy-related inflation, how AI may affect inflation and whether he believes the neutral rate has moved higher," she explains.

Chaudhuri also says that the market will be watching for any comments on the Federal Reserve's future path for projections and guidance. "Warsh has previously been critical of the Summary of Economic Projections, making any comments on the future of the dot plot particularly noteworthy," she says. "In the past, he shared that he believed dot plots provide a false sense of precision, cause the bank to focus more on forecasts than reaction, and that too much forward guidance can become a policy tool of itself."

- Karee Venema

Stocks edge higher, bond yields barely budge ahead of Fed statement

Stocks are trading cautiously higher ahead of the June Fed statement, due out at 2 pm Eastern Standard Time.

The blue-chip Dow Jones Industrial Average is in the lead, up 0.4% on strength in financial giant Goldman Sachs (GS, +2.6%) and industrial stock Caterpillar (CAT, +2.5%). The broader S&P 500 is 0.03% higher and the tech-heavy Nasdaq Composite has edged up 0.08%.

Bond yields have failed to make any major moves, as well. The yield on the 2-year Treasury is up 2.1 basis points at 4.068%, while the 10-year Treasury yield flat at 4.428%.

Any post-Fed market volatility is a "buying opportunity," says Main Street Research's CIO

The June Fed meeting is the most important in recent memory, says James Demmert, chief investment officer, Main Street Research. "Investors will now have to get used to the new Fed Chair's communication style, which is an adjustment period for markets."

Demmert doesn't expect the FOMC to make any changes to the federal funds rate this time around, but considering lower oil prices could spur economic activity, he thinks Chair Warsh could "mention accelerating economic growth and the potential for higher rates going forward, even with the political pressure he is facing to cut rates."

The CIO adds that any Fed-induced market volatility represents "a buying opportunity" for investors as he believes "market fundamentals remain in place."

- Karee Venema

The Fed decision is in

The Fed decision is in. As expected, the FOMC kept the federal funds rate at its current range of 3.5% to 3.75%.

Unlike recent decisions, the vote was unanimous.

- David Payne

The June FOMC statement is much more terse than usual

The June FOMC statement looks very different than the ones we've become accustomed to. Given how barebones it is, there's really not much we can read into it — though this should be expected, given that Warsh is reported to be in favor of less communication.

The FOMC did release the Summary of Economic Projections and the dot plot, despite some indication that Warsh wants to get rid of it. Both show an expected gradual decline in the fed funds rate over the next several years.

The press conference should be interesting.

- David Payne

Where can I watch Fed Chair Warsh's press conference?

Fed Chair Kevin Warsh's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

The path to avoid rate hikes is narrow, says Kay Haigh of Goldman Sachs

"Today's meeting confirms that the Fed's recent hawkish shift was not just about higher energy prices," says Kay Haigh, global head and CIO of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management.

Haigh adds that despite the recent drop in oil prices, the dot plot shows that half of the committee members expect rate hikes as soon as this year.

This, he notes, reflects strong labor market and inflation data. "Our base case remains that the Fed can just about avoid hikes, but the path is narrow and there will be a high premium on the incoming inflation data," Haigh concludes.

- Karee Venema

Stocks turn lower after Fed announcement

The main equity indexes have turned lower after the release of the Fed statement. At last check, the Dow Jones Industrial Average was down 0.09% at 51,954, the S&P 500 was off 0.4% at 7,480, and the Nasdaq Composite was 0.6% lower at 26,230.

Meanwhile, the 2-year Treasury yield was up 10.8 basis points to 4.155% and the 10-year Treasury yield was 4.1 basis points higher at 4.469%.

Warsh promises price stability

"This committee will deliver price stability," Kevin Warsh emphatically announced in the opening statement of his first press conference as chair of the Federal Reserve.

He noted that inflation has been running well above the Fed's 2% goal for five years now, something that American consumers know well.

Whether Warsh can bring inflation back to a tolerably low level, and what it would take to do that, are the real questions.

- Jim Patterson

Warsh announces new Fed task forces

Warsh started his first press conference with a sweeping announcement of new task forces he has formed at the Fed to reconsider a range of the central bank's operations.

One will reexamine how much the Fed communicates about its future monetary policy decisions, suggesting that the Warsh Fed may be less forthcoming about signaling potential changes to interest rates and other monetary policy decisions.

Markets may have to get used to receiving less guidance from Warsh than they got from his predecessor.

- Jim Patterson

Warsh says the Fed is no longer promising forward guidance

"Inflation is a choice" for central bankers, Warsh said: A mantra he has harped on before. In other words, he believes that monetary policy is the main driver for inflation, not economic events. And by that logic, he indicated, the Fed can and will get inflation under control.

He declined to say how specifically it will do that, and whether he would contemplate raising interest rates soon, saying that under him, the Fed is dropping "forward guidance" about future rate decisions.

He noted that some of his colleagues on the FOMC have penciled in interest rate increases for later this year, but said those pencils come with erasers. In other words, nothing has been decided about rates later this year.

- David Payne

Warsh talks future press conferences

When asked whether he will continue with post-meeting press conferences, Chair Warsh said that pressers can be a useful way to communicate.

Citing his mentor George Schultz, Warsh said that when you have a press conference, you better have something important to say. Walsh noted that today he had something to say, about price stability and some changes that he's making to the Federal Reserve.

While Warsh did not commit to specific future press conferences, he did say that more changes are to come and those changes will be worthy of a press conference.

- Karee Venema

Warsh says the Fed will rely on different data sources, but did not give specifics

Warsh doesn't want markets to react too closely to economic data just because they assume those data releases will influence the Fed in one way or another. And he seems frustrated that the Fed relies heavily on government statistics that take time to collect and go through multiple revisions.

He intimated that under him, the Fed will be studying other data sources, and methods for analyzing economic data, to get a better real-time read on how the economy is doing. But he did not go into any details about what those new sources or methods could be, leaving markets to guess for now on what Chair Warsh will be looking at as he makes monetary decisions.

- Jim Patterson

Warsh is not concerned about the market's reaction to the Fed's limiting of communication

"This is a lot of change for financial markets to digest," Warsh said, referring to his plan to limit how much the Fed will be communicating about its future monetary moves. But he also indicated he's not concerned about how markets react to that change.

The main purpose of his inaugural press conference seems to be to drive home the point that he won't be foreshadowing any changes in Fed policy to the media, and that investors will have to get by without such hints.

"I don't have anything for you" was a recurring theme of his answers to questions from the assembled financial media. His message seems to be "Trust us to bring inflation down, but don't expect us to explain how we'll do that before we're ready to do it."

- Jim Patterson

Interest rates are having an "uneven" impact on the economy, says Warsh

A glimmer of a hint on how Warsh sees present interest rates: He said that they seem "restrictive" when it comes to the housing market, but not necessarily in other parts of the economy.

He referred to the present level of rates as "uneven" in terms of how rates are impacting the economy. That doesn't suggest he clearly favors either a rate hike or cut in the future. But considering that he was initially seen as a Fed chair who favored lower rates, the description of today's rates as having an "uneven" impact at least suggests he's not in a race to cut rates right now.

He did not indicate that today's rate level is holding the economy back and needs to be lowered.

- Jim Patterson

Fed may be waiting to see the impact the Iran deal has on oil prices

The dot plot shows that half of the committee members wanted to leave interest rates unchanged for the rest of the year, while the other half thought rates would need to rise a little. Yet Warsh notes that no one in the meeting brought up increasing the federal funds rate this time around.

This may be because the FOMC wants to see what the impact of the Iran deal will be on oil prices.

- David Payne

"Trends matter more than data points," says Warsh

"Trends matter more than data points," Warsh said in wrapping up his remarks. Commenting on the recent trends in the labor market, he indicated optimism, including on the potential for artificial intelligence to boost worker productivity.

That seems to be an important part of his overall approach to monetary policy: The idea that new technology like AI can help lower inflation by enabling workers to do more, thus easing cost pressures for businesses and enabling them to curb price increases. But, in keeping with the theme of his earlier remarks, Warsh did not go into specifics about what that trend could mean for Fed interest rate decisions.

Investors should get used to hearing less from the new Fed chair, rather than more.

- Jim Patterson

Beat inflation: the savings accounts that actually work

Inflation recently hit 4.20%, and most savings accounts aren't keeping up. It means if you have a savings account earning less than inflation, you're losing money — and as the Fed didn't raise rates today, you're not likely to see an increase in your current account.

We're tracking the high-yield savings accounts and CDs that are actually beating the curve, see them here: Inflation Is at 4.2%: These Savings Accounts Are Outpacing It

Stocks close lower after June Fed meeting

Stocks were choppy in the lead-up to Wednesday afternoon's shortened policy statement from the Federal Reserve, but made a decisive turn lower after it was released.

By the closing bell, the blue-chip Dow Jones Industrial Average had declined by 1% to 51,493, despite reaching another new all-time high on an intraday basis. The broad-based S&P 500 was down 1.2% at 7,420, and the tech-heavy Nasdaq Composite was off 1.3% at 26,021.

Market-based interest rates were up across the maturity spectrum, with the 2-year Treasury yield, widely watched as a gauge of short-term policy, rising to 4.216% from 4.047% on Tuesday.

CME FedWatch, which tracks the probability of rate cuts and rate hikes based on 30-day fed funds futures prices, indicates the Warsh Fed could raise interest rates as soon as October.

Read more: Dow Falls 507 Points as Fed Chair Warsh Speaks of Price Stability: Stock Market Today

The bar for rate cuts is higher, says Johnson Investment Counsel's chief economist

While the Federal Reserve's decision to leave interest rates unchanged came as little surprise to Wall Street, the statement and updated projections indicate a shift in the central bank's underlying policy framework, says Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel.

"Notably, the post-meeting statement was streamlined and sharpened in tone, emphasizing that inflation 'remains elevated' and explicitly highlighting the role of recent supply shocks — particularly in energy — in driving price pressures," he adds.

The FOMC statement also reinforced the diminishing urgency in lowering interest rates due to "solid" economic activity and a stable labor market. "Taken together, these adjustments mark a clear move away from the easing bias that defined earlier communication this year," Zureick explains.

 The updated Summary of Economic Projections, which shows a split between holding rates steady and raising rates this year, underscores this shift, the economist says. "In addition, the Fed revised its macroeconomic assumptions, suggesting an environment with higher expected inflation, somewhat slower growth, and a still-resilient labor market."

With Chair Warsh reluctant to offer forward guidance, Zureick says the overall message from the June Fed meeting is that "the bar for rate cuts has moved higher, and investors will need to look further out on the horizon — particularly to 2027 and beyond — for clarity on the eventual path of policy normalization."

- Karee Venema

Entire careers in financial journalism are built on being able to understand and interpret what the Federal Reserve is doing with monetary policy.

Perhaps, instead of a bunch of "Fed whisperers" to describe our experience, the thing we really need right now is the "hammer of the gods." Subtlety, after all, is just not President Donald Trump's thing.

And though he may not know Jimmy Page from Robert Plant, a contention here is Trump would appreciate something like "Immigrant Song," if maybe ironically and only at the most superficial level.

He did say Kevin Warsh was "from central casting" when he nominated him to replace Jerome Powell as Fed chair, so surely Trump knows the value of a good front man.

And Robert Plant is perhaps the greatest front man in modern musical history. Setting aside the question of Trump's relationship to Jimmy Page in this analogy (and ignoring Mick Jagger), we'll see about Kevin Warsh.

With all of that in mind, here are five Led Zeppelin tunes that explain the biggest central bank in the world at another critical point in its more than hundred-year history.

Whole Lotta Love

"I love the inflation."

That's a big, bold statement.

President Trump said it after the closing bell on June 10, the day the Bureau of Labor Statistics (BLS) reported the Consumer Price Index (CPI) had reached a three-year high on an annualized basis in May.

Perhaps he was a little dazed, somewhat confused.

Maybe, though, he's just ready to run it hot and rock and roll.

Battle of Evermore

During his confirmation hearing, Warsh talked about "regime change in the conduct of policy" — choosing his words for maximum impact during his time in the hot seat/spotlight.

Every chair wants to rule the central bank. More often than not in the modern age of fiscal sclerosis at the federal level, circumstances take charge.

You get things like "committees to save the world" co-led by activist monetary policymakers templatized by Alan Greenspan. Then there's Ben Bernanke's "quantitative easing" amid the global financial crisis/Great Recession.

And this one must grapple with Trump as he navigates the facts on the ground and how a bank like his might help the economy steer clear of things such as recessions and depressions.

At the same time, from its founding on Jekyll Island in 1912 to the recent confirmation hearing for its next leader, the Federal Reserve has stirred passionate debate in America.

Indeed, more than a century before the Fed was created, the First Bank of the United States generated all kinds of controversy about its constitutionality.

Then, Andrew Jackson built his populism-based political career and historical legacy on opposition to and destruction of the Second Bank of the United States.

We've been arguing these types of questions — what should a central bank do; who should it serve — for literally centuries. Note, too, that Donald Trump didn't invent the bully pulpit, and Kevin Warsh will be one of one if he avoids its reach.

Also, though, Kevin Warsh by word and deed is a central banker who respects the role of the Federal Reserve on the grand stage.

He was, in fact, Ben Bernanke's right-hand man when that Fed chair used the central bank's balance sheet to help the global economy get through the Great Recession – and avoid another Great Depression.

Communication Breakdown

Before he was confirmed by the Senate, Warsh said all kinds of things that suggest he wants to lower the profile of the world's most important central bank. But markets have grown accustomed to celebrity Fed chairs and the "transparency" they seem to support.

They and their fellow members of the Federal Reserve Board of Governors are all over the place these days speaking in support of things like their quarterly Summary of Economic Projections (SEP).

"The Fed tells the whole world what their dots are going to be, what their forecasts are going to be," Warsh said of the SEP during his testimony before the Senate Banking Committee. "Well, the Fed's human. And then they hold on to those forecasts longer than they should.”

Warsh alludes to a very human frailty known as "confirmation bias": the tendency we have to focus on information that supports our current view and exclude information that contradicts it.

"If the Fed were to wait until it gets into a meeting before making a decision," Warsh believes, "incremental deliberation can keep the central bank from compounding its errors."

The dot plots, as Warsh sees them, promise transparency but, ultimately, undermine credibility. "I think these are big changes that are needed," the nominee told the committee, "and if confirmed, I look forward to doing it.”

He'll hold one on June 17, but Warsh hasn't said whether he will or will not continue with post-FOMC-meeting press conferences for the long term.

"Fed chairs and other central bankers around the FOMC, they speak quite frequently," he said during his confirmation. "I would say this: I think truth seeking is more important than repetition. If one has a press conference, one wants to deliver some important news.”

When the Levee Breaks

We like to keep it real around here, so let's first acknowledge that "When the Levee Breaks" was written and first recorded by Kansas Joe McCoy and Memphis Minnie in 1929.

They knew firsthand about things like the Great Mississippi Flood of 1927. Page and Plant, not so much. Led Zeppelin's version is a ripper, though. Bluesmen by trade, they did have enough touch and feel to interpret others' lived experience.

Can we say the same about Trump and Warsh, specifically as it relates to things like the Fed serving the "lender of last resort" function in a dynamic modern economy?

Who will organize a collective global response if another financial crisis hits? Warsh's response to a question about the dollar and its position in the world during his confirmation hearing shed some light on his position.

Noting "risks to the U.S. position in the world, including economic" and from state actors, Warsh emphasized the "economic statecraft agenda led by Secretary Bessent and Secretary Rubio," referring to the respective heads of the Treasury Department and the State Department.

"The Fed will play a supporting role in ensuring that the financial system is as safe as it can be and work with them," Warsh said, "because it's outside of the conduct of monetary policy to ensure the U.S. is on its front foot and in a position of strength during this period of rivalry between the U.S. and another nation around the world."

No Quarter

Absent a major trend change, there will be no quarter-point cut or downward adjustment of any size to the federal funds rate, neither next week nor over the remaining four FOMC meetings in 2026.

While the president still seems to be stumping for lower interest rates as both consumer and wholesale prices accelerate, market-based measures of near-term Fed policy are rising.

The 2-year Treasury yield, a gauge of short-term Fed policy, has risen from 3.379% on February 27, the day before the war in the Middle East began, to 4.087% as of June 12.

And CME FedWatch reflects a 98.6% probability that the fed funds rate remains in a range of 3.50% to 3.75% through the June 16-17 meeting.

Indeed, the trend right now favors a rate hike as opposed to a rate cut.

Related content

• Invested in Index Funds? Here's What You Need to Know About Mega-Cap IPOs
• The Best Semiconductor ETFs: How You Can Mine the AI Gold Rush
• Should You Buy SpaceX Stock?

To help you understand what is going on in the global economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest...

After a first half defined by the Iran war and its impact on oil, commodity prices and inflation, the rest of 2026 will test the global economy, even as AI-driven optimism continues to lift growth. With the Persian Gulf’s energy exports still hobbled, the second half will be far from dull for global markets.

The pace of global growth will slow down, cooling to roughly 2.8% in 2026. Volatility will continue as inflation pressures spread from energy outward into metals, fertilizers, and industrial inputs, pushing the global inflation rate up to about 4.5%. Here is what to expect in key countries.

The U.S. economy will remain resilient, insulated from the worst of the oil price shock by its domestic oil and gas production. Continued AI, national defense, and energy spending will serve to prop up business investment, keeping GDP growth around 2.1%.
But consumers are feeling the strain, as the personal savings rate continues to dwindle, inflation persists and long-term unemployment rises. A spending pullback seems inevitable at some point.

Europe’s macroeconomic outlook is shifting toward stagflation. Expect eurozone growth of just 0.8%, as the energy shock hits an economy lacking fiscal buffers. Germany will struggle to grow more than 0.7% as surging energy costs weigh heavily on its industrial sector.

The U.K. economy is shifting to a lower gear, with growth slowing to 0.9% as inflation squeezes incomes.

India will be a star performer in Asia, though growth will moderate to 6.5%.

China will continue to decelerate, slowing to 4.5% as the property sector remains a drag, though surging green-tech and AI-related exports offer a bright spot.

Japan faces a delicate balancing act, as it battles a weak yen and inflation imported from abroad while supporting a fragile economy expected to grow just 0.4%.

Growth in Latin America will face headwinds from weaker Chinese demand for the region’s commodity exports, tighter U.S. lending terms and rising fuel costs.

Interest rates won’t likely fall as much as investors were hoping this year. Central banks are caught between rising inflation rates and a softening labor market. The Federal Reserve is on hold for now, with rate cut expectations having evaporated, while the European Central Bank is moving toward an isolated June rate hike.

Finally, keep an eye on U.S. private credit lenders. Stresses are emerging, particularly in software loans. A systemic financial crisis is unlikely, since lenders in the industry aren’t as critical to the financial system as the biggest banks were during the mortgage crisis of 2008. For private credit, the losses will be a slow burn for investors. That could dampen the ebullient mood on Wall Street later this year.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Content

• Iran War Upends the Global Oil Industry: A Kiplinger Special Report
• Energy Stocks to Buy While Prices Spike
• Kiplinger Energy Outlook

Recent economic reports confirm that the war in Iran, which has caused energy prices to spike, is accelerating inflation. Indeed, the Consumer Price Index (CPI) for May rose at its fastest annual pace in three years.

According to the Bureau of Labor Statistics (BLS), headline inflation was up 0.5% from April to May and 4.2% higher than the year prior. The monthly increase was slower than the 0.6% rise seen in April.

The annual rise signaled an uptick from the 3.8% increase from the month prior and was the highest yearly pace since April 2023. Both figures matched economists' estimates.

Energy costs had the biggest impact on the May CPI report. "The index for energy rose 3.9 percent in May, after rising 3.8 percent in April and 10.9 percent in March. The energy index accounted for over sixty percent of the monthly all items increase," wrote the BLS in its report.

Unless something changes in the Middle East, "gasoline and other fuel prices will continue rising in the coming months," writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger inflation outlook. "Food prices will also start rising in the future, as one-third of the world's fertilizer supply is produced in the Persian Gulf region, along with 10% of aluminum, used in everything from jets to soda cans."

Higher inflation will make the Federal Reserve more hesitant to lower interest rates — especially amid signs the labor market is stabilizing. According to CME Group FedWatch, futures traders don't expect any rate cuts at all in 2026. Earlier this year, betting odds were for at least one quarter-point cut.

The Federal Open Market Committee may even consider rate hikes this year, notes Payne. "The Fed generally discounts energy price fluctuations in its deliberations on interest rate policy. But the central bank will also note that 'core' inflation (excluding food and energy) is likely to creep upwards as the year progresses," he explains.

What is the CPI?

"CPI is a measure of the average price of that basket of goods and services over time," writes Kiplinger contributor Coryanne Hicks. "The specific goods and services within the CPI basket are based on information that around 24,000 families and individuals give the U.S. Bureau of Labor Statistics on what they buy."

The two primary measures of CPI are headline, which is the total inflation rate experienced by households, and core CPI, which excludes volatile food and energy prices.

In May, core CPI was up 0.2% month over month, a downshift from April's 0.4% increase and slower than economists expected. Year over year, core inflation was 2.9% higher, slightly faster than the 2.8% increase from the year prior and in line with estimates.

Prices for airfare, medical care and recreation were all higher in May, while costs for new cars, household furnishings and car insurance were lower.

With the May CPI report on the books, we looked at what economists, strategists and other experts on Wall Street have to say about the data. You'll find their insight, edited at times for brevity, below.

What Wall Street is saying about the May CPI report

"While the recent spike in both headline and core inflation is meaningful and a headwind for the economy and more cyclical sectors, tailwinds from the AI investment cycle, potential benefits from the Big Beautiful Bill, and the lagged impact of Fed rate cuts are all still providing meaningful support. If the Iran conflict drags on and inflationary pressures continue to build, there could come a point where that balance shifts, but we don't see that today." - Tim Urbanowicz, Chief Investment Strategist, Innovator ETFs from Goldman Sachs Asset Management

"It's very possible that things wrap up in the Middle East and shipping gets back to normal over the course of the rest of the year, in which case we can see inflation come down over time and the Fed could hold off raising rates, but if things stay as they are currently, then all bets are off. The stock market has been climbing a wall of worry and has been able to rally on stronger earnings and stable interest rates, but a rising rate environment is another thing altogether." - Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"With core measures suggesting more limited price increases and much of the upside coming from oil directly (energy) or indirectly (airfares), today's release suggests that inflationary pressures stemming from the oil price shock have remained manageable for the U.S. economy so far. Cooler core inflation is an encouraging sign for investors, suggesting less of a need for the Federal Reserve to raise interest rates if inflationary pressures stay more contained than previously expected. However, continued uncertainty around the prospects for a durable peace deal and a reopening of the Strait of Hormuz are likely to overshadow today’s positive inflation news given the re-escalation of tensions over the past 72 hours." - Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"While Wednesday's CPI was in line with expectations, inflation is still elevated and far from the Federal Reserve's 2% target. Once consumer prices rise, it takes time for this trend to reverse. The road back to an inflation rate near the Fed's 2% target will not be immediate is becoming more and more of a fantasy. Rising oil prices are to blame for this inflation, but tariffs are also inflationary and everyday things like food and healthcare costs are reaching unsustainable levels. It's clear that rate cuts are off the table, and while there is chatter about a potential rate hike, we believe it's unlikely that we'll see a rate hike before the midterm elections, and any such hike is likely a year away." - Skyler Weinand, Chief Investment Officer at Regan Capital

"Core prices were in line. The tentative conclusion is that energy is not bleeding into core items. Or at least the leakage is being offset by tariffs passing through. This news should pacify the hawks on the Federal Open Market Committee (FOMC)." - Brad Conger, Chief Investment Officer at Hirtle & Co.

"Today's inflation information does little to resolve the reality that the last mile of inflation has been difficult for the Fed to defeat. The reality is that inflation has been persistently stuck above their 2 percent target for the past few years with little to no progress. The weak labor market has provided the Fed the cover to cut rates despite this reality. With the labor market healing, investors are rightfully pondering if the Fed will have to refocus on actually meeting their inflation mandate." - Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management Company

Related content

• 5 ETFs to Hedge Your Inflation Risk
• The Best Inflation-Proof Investments for Your Portfolio
• Recession-Proof Stocks: Best Stocks to Buy for a Recession
• How to De-Risk Your Portfolio in 5 Different Scenarios
• How Inflation Affects Your Finances and How to Stay Ahead

To help you understand what's going on in the economy, domestic and global, our highly experienced Kiplinger Letter team keeps you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

The Persian Gulf will eventually reopen to shipping and allow the region’s vast energy exports to resume flowing. But the world energy market will never be the same after months of severe disruptions from the war and blockade.

Oil and gas

Security of oil and gas supplies will assume much greater importance for both producers and consumers. By some measures, the loss of exports from the Persian Gulf has been the largest disruption to energy supplies in history. The economies that rely most on Middle Eastern energy, especially those in Asia, will be looking to diversify their supply options. Meanwhile, the oil and gas exporters that line the Persian Gulf will be working on alternate ways to get shipments out. No one is going to want to risk another closure of the narrow Strait of Hormuz, the passageway for a fifth of the world’s oil and vast supplies of gas before the war.

The war has shown a need for greater reserves of oil and refined fuels in parts of the world that depend heavily on imports. At the beginning of the conflict, China had a massive 1.4 billion barrels of strategic reserves, but many other Asian countries lacked much of a buffer when Middle Eastern barrels stopped arriving. Going forward, expect a race to refill existing storage with crude oil, jet fuel and other products, and then to add additional storage tanks, to guard against future supply disruptions.

The oil-rich U.S. will need to be part of this trend of boosting stockpiles. The Strategic Petroleum Reserve has played a key role in making up for lost output, but it was already heavily depleted in 2022, when Russia invaded Ukraine. Now, it has only about half its long-term storage level, and needs to be refilled eventually.

In the Middle East, expect a scramble to build new pipelines as alternatives to shipping via the Gulf, which Iran showed it can shut down. Saudi Arabia’s pipeline to its west coast proved a vital lifeline for energy markets during the war. The UAE (United Arab Emirates) is rushing to build another pipeline that bypasses Hormuz, which it plans to finish in 2027. Iraq will likely try to hike pipeline exports via Turkey. Meanwhile, the region faces a hefty repair bill for its existing energy infrastructure, more than $50 billion, per one industry estimate. When the war is truly at an end, the Persian Gulf region will see an explosion in energy-related repair and construction.

For oil-producing nations elsewhere, the war spells potential new exports. Places that can boost supply and face lower geopolitical risk stand to be rewarded. Among them:

• Canada, whose hefty output was already gradually rising
• Argentina
• Brazil
• Guyana
• Venezuela, home to the largest oil reserves in the world by many estimates.

Venezuela's industry needs major investment after decades of mismanagement by its socialist government. But already, exports to the U.S. are up in the wake of the capture of former President Nicolás Maduro. The only American firm operating there now is Chevron. But others may cautiously join it in the coming years.

Note the geographical shift here: More oil output in the Western Hemisphere, far from the war-torn Persian Gulf. The U.S. will remain the world’s top oil producer, though it is unlikely to grow much more as our most productive oil fields mature and investors press energy firms to keep drilling costs down. But our huge production and extensive refining sector will anchor the growing energy industry in the Americas.

Natural gas

Lost oil exports have received most of the attention during the Iran war. But don’t overlook natural gas.

Prior to the war, about one-fifth of LNG (liquefied natural gas, superchilled for shipping) came from the Persian Gulf. The conflict halted that trade, and some LNG export facilities are badly damaged.

America, already the largest gas exporter, stands to grow in importance as it builds more LNG export terminals and continues pumping more gas to sell in overseas markets. With Middle East gas supplies in doubt and Russian LNG under sanction from Western governments, U.S. gas will be in even higher demand. While America’s oil production shows signs of flattening, gas output is growing. Nine LNG export facilities now operate in the U.S., with several more coming. America is becoming the Saudi Arabia of gas — a prolific supplier of a commodity that is vital for everything from power generation to space heating and fertilizer.

Being the world’s gas supplier is an economic boon, but one with caveats: How much of our gas bounty to export could become a political football, particularly as voters see their power bills soar and worry that exporting more gas will lead to still-higher utility costs. Energy-intensive industries will feel likewise. These debates are not new, but look for them to take on more urgency before long.

Petrochemicals

The Iran war will help prolong North America’s petrochemical cost advantage, which had been narrowing amid lower oil prices and global overcapacity. Due to America’s abundant natural gas, U.S. chemical makers use ethane as a feedstock instead of the oil-derived naphtha that dominates in Europe, Asia and Latin America. With global oil prices up almost 50% since before the war started and U.S. natural gas still at low prices, ethane now has a clear cost advantage over other countries’ naphtha.

Still, expect the industry to be cautious about ramping up domestic capacity, given the prewar state of the market, in which many older and higher-cost producers were under pressure. About 10 million tons of ethylene capacity was slated for closure, a number that could rise to 20 million tons, or 10% of global capacity, by 2028. An effort to increase domestic fertilizer production is already under way. The Department of Agriculture expects capacity to increase by more than 4 million tons, thanks to a revived and revised Fertilizer Product Expansion Program (FPEP). The FPEP will help fund new production facilities in Iowa and Washington.

The Trump administration has also focused on streamlining other requirements for fertilizer producers. Officials aim to complete the permitting for a new CF Industries ammonia plant in Louisiana in 45 days. Ordinarily, it can take years. Once completed, the facility will be the largest of its kind in the world, producing 1.5 million metric tons of ammonia annually.

OPEC

Back in the Middle East, the Iran war poses a threat to OPEC’s dominance of the global oil market. Overshadowed by the fighting was the recent news that the United Arab Emirates, one of the oil cartel’s biggest producers, is leaving and pursuing its own energy policy. With Saudi Arabia, the UAE had long worked to balance oil markets by adjusting its output up or down to keep prices stable at levels that work for OPEC members. Now, it stands to pump more of its crude oil, lessening the cartel’s ability to control prices. That suggests greater volatility ahead, especially if more OPEC members decide they are better off operating on their own.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Content

• What the Oil Market Is Telling Us Right Now About Energy and Gas Prices
• War in Iran Threatens Higher Fuel Prices, Renewed Inflation
• How to Avoid Fuel Surcharges on Your Summer Travel
• Who Controls Gas Prices in the US?
• Kiplinger Energy Outlook: Drivers Feel the Effects of War in Iran
• Gas Prices Are Rising Fastest in These States

The May jobs report was released Friday morning, giving the Federal Reserve the latest update on the labor market ahead of its upcoming policy meeting slated for June 16-17.

The labor market is showing signs of resilience, with the U.S. adding 569,000 new jobs so far in 2026, or 113,800 per month on average.

This includes the 172,000 new jobs the U.S. added in May, as reported by the Bureau of Labor Statistics (BLS). This blew past economists' consensus estimates for the addition of 80,000.

Leisure and hospitality saw the largest increase in job gains, adding 70,000 new positions, while local government was close behind with 55,000 new jobs. Healthcare (+35,000) and social services (+12,000) also saw notable job additions.

Financial services saw the biggest decline in jobs (-22,000), led by insurance companies and commercial banking.

Job gains for March (+29,000 to 214,000) and April (+64,000 to 179,000) were upwardly revised, too.

The unemployment rate, which is derived from a separate survey, remained unchanged at 4.3%, as expected.

The strong jobs reports "should dispel concerns at the Federal Reserve that the economy might be weakening," writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger jobs outlook, adding that rate cuts are off the table for the time being.

The Federal Reserve's next meeting is less than two weeks away, with its latest policy decision due out at 2 pm Eastern Standard Time on Wednesday, June 17.

According to CME Group FedWatch, futures traders are widely expecting new Fed Chair Kevin Warsh and the rest of the Federal Open Market Committee (FOMC) to keep interest rates unchanged this time around.

ADP jobs report comes in higher than expected

Wall Street got a glimpse of how things are going in the labor market on Wednesday morning with ADP's National Employment Report, which showed private payrolls rose by 122,000 in May — more than economists expected and more than the 101,000 jobs added in April.

"Hiring was more broad-based in May than we've seen in the last few years," says Dr. Nela Richardson, chief economist at ADP. "The labor market continues to show sustained momentum going into the summer hiring season."

Growth was seen across businesses of all sizes, though companies with 49 employees or less added the most positions (+67,000). As for industries, education and health services (+57,000) saw the largest increase in jobs last month, while trade, transportation, and utilities (+36,000) and professional and business services (+11,000) also experienced strong gains.

With the May jobs report on the books, we looked at what economists, strategists and other experts on Wall Street expect the data to show and what the results could mean for the Fed and investors going forward. You'll find these outlooks, edited at times for brevity, below.

What Wall Street has to say about the May jobs report

"Payroll Blowout! We've gained more and more confidence in the last prints that the Fed doesn't have to be worried about the labor market. Laser focused on inflation and it will all come down to the duration of this War to determine the Fed's next move. For now, the move is to not move: HOLD." - Lindsay Rosner, Head of Multi-Sector Fixed Income Investing at Goldman Sachs Asset Management

"Friday's jobs report was much stronger-than-expected and shows that the labor market is turning a corner after a rough past 12 months driven by fears of AI and uncertainty over geopolitics and tariffs. The revival of the labor market makes the Federal Reserve's job easier and allows it to keep rates steady in the meantime as it assesses the volatile inflation situation." - Glen Smith, Chief Investment Officer at GDS Wealth Management

"Today's numbers are consistent with other positive recent labor market indicators as well, such as better-than-expected job openings and declining layoffs. Employers appear to be looking past economic and financial uncertainties brought about by the ongoing conflict in the Middle East." - Jerry Tempelman, Former Senior Analyst at the NY Fed and VP of Economic and Fixed Income Research at Mutual of America Capital Management

"Today's upside surprise underscores ongoing economic resilience, but it will also likely keep the Fed — and the markets — focused on inflation pressures." - Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"The labor market has strengthened and importantly broadened from its weak and narrow state in 2025, where non-cycle healthcare and the social assistance segment of the U.S. economy was responsible for all the job growth and more. The good news for the consumer is that the labor market is strong and Americans are employed. The concerning news for future spending is that real wages are negative as average hourly earnings have risen 3.4% YOY vs current inflation which is running at 3.8%. The Fed is likely to attempt to wait and see, but their focus is likely to shift to the inflation side of the mandate." - Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management Company

"It's going to be a tough start for Kevin Warsh. With the inflation and employment data where they are now the debate is quickly moving on from 'when will the Fed be able to cut' to 'why isn't the Fed hiking?!'. If the Fed moves from a dovish bias to a hawkish bias that will be a difficult transition for the markets to digest, and would likely trigger a renewed bout of volatility across asset classes." - Stephen Coltman, Head of Macro at 21shares

Related content

• What to Look Out for in Economic Data This Week
• Should You Work in Retirement or Work on Your Golf Swing?
• Kiplinger Economic Forecasts

To help you understand what's going on in politics and the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

You’ve heard about the K-shaped economy — the idea that affluent households’ financial fortunes are on an upward trajectory, while the middle class and lower-income consumers are trending down — what does it mean in practical terms?

The up and down slopes of the K are a useful proxy for the divergence of different types of consumers. But let’s look at what it means for the economy. The gap in spending power has been growing: The highest-earning 20% of households accounted for half of all consumer spending in 1995. Now it's about 60% of all spending.

The top 10% drive half of all purchasing across the economy. This bodes well for sellers of luxury goods and services: Jewelry, high-end cars, high fashion, exotic travel, home renovations, fine dining, etc.

Less-affluent shoppers are feeling strained. And are spending accordingly. As a result, the discounters stand to win more business as lower-income folks seek to stretch their dollars. This goes for the middle class and modestly well-off, too…there is a noticeable trend of those consumers shopping more at large discount chains, even if they technically don’t have to. For instance, buying groceries at Walmart or Aldi instead of Kroger or Safeway.

Retailers who cater to the middle of the income spectrum will struggle as their traditional customer base feels pressure to shop down-market, while the rich continue to patronize businesses that cater to the well-off. The recent sales struggles at Whirlpool, which says its basic appliances are selling well, but not its fancier ones, are a harbinger of this trend, middle-income folks prioritizing essentials over splurges.

This divergence explains why consumers are downbeat but still spending: Net spending, driven by the affluent, is up. But overall sentiment is down because the affluent make up only a small share of the people in economic surveys.

This is one reason financial markets have been able to perform so well, even when most consumers aren’t feeling good about their finances. Business is OK in general, and there’s little sense of the euphoria that can carry bull markets too far.

Note the obvious downside of wealthy consumers driving the economy: The vulnerability to a pullback, especially whenever the stock market drops. More and more, GDP growth depends on a small subset of well-off folks who feel great about their financial situations, as long as stocks are rising, home values hold up, etc. When the next market downturn hits, those same consumers may feel differently.

Meanwhile, the less wealthy are already getting tapped out, as shown by the decline in the national savings rate, now under 4%, vs. a historical norm of 5.5%. Few people are building much of a safety net to cushion the blow when the next bear market hits.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Content

• Bull Markets vs Bear Markets: The Differences Explained
• How Rising Interest Rates Can Affect You
• What Will the Fed Do at Its Next Meeting
• Kiplinger Economic Forecasts: GDP, Inflation, Interest Rates, Energy and More...

To help you understand what's going on in business and the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Another commodity facing Iran war fallout: Industrial metals. The Middle East conflict has disrupted supplies, increased production costs and created another headache for U.S. manufacturers already dealing with the effects of higher tariffs.

Aluminum has taken the greatest hit. Prices have jumped dramatically since the war began, damaging regional smelters and curtailing shipments from the Persian Gulf, where six countries account for a fifth of U.S. aluminum imports. The metal’s cost in the U.S. has grown by nearly 90% over the past year, fueled in part by tariffs jumping from 10% to 50%.

U.S. consumption totals 27 billion pounds of aluminum, used for everything from fighter jets to soda cans. The U.S. auto industry, in particular, is struggling, as higher costs and supplier outages hamper efforts to increase the aluminum content of its cars. North American automakers consume 30% more aluminum than they did in 2020. Transportation, including the aerospace sector, accounts for a third of U.S. aluminum demand, the most of any category.

Rising Chinese output should ease the deficit in global supply, now the worst since 2019, starting in the second half of this year. The U.S. could see its first new aluminum smelter since 1980, with construction set to begin later this year. Although the smelter won’t be up and running until the end of the decade, officials hope it’s the first of many new investments in U.S. capacity.

The war will affect the price of industrial metals in other ways. For example, mining costs tend to increase with oil prices. Iron ore operations are most sensitive, with costs increasing 4.2% for every 10% rise in oil prices, versus 3.5% for copper and 2.0% for gold. If oil averages $100 per barrel in 2026, mining costs could increase by 20% for iron ore, 16% for copper and 9% for gold. An ongoing sulfuric acid shortage also affects miners’ ability to extract minerals like copper and nickel from their ores.

Other factors will likely buoy industrial metals demand in the long term. Copper demand, for instance, is expected to increase 50% by 2040, with rapid growth in renewable energy and artificial intelligence adding to the metal’s industrial uses. Analysts also expect a growing copper shortfall, with production peaking in 2030.

Still, prices will fall if the energy supply crunch hits the global economy, which will become more likely if the two sides can’t sign a peace deal.

Keep an eye on metals with vital defense applications, such as tungsten, used in armor-piercing munitions and jet engine components, among other things. Global output is relatively small, 93,000 tons, vs. nearly 3 billion tons of iron ore and is dominated by China. It’s one of many metals included in White House efforts to coordinate supply with allies and reduce reliance on China.

Despite tensions over Iran, Greenland, defense spending and more, the U.S. and EU are deepening their cooperation on critical minerals. The two sides have signed a memorandum of understanding that could pave the way for common standards on mining, processing and recycling, as well as price floors and strategies for stockpiling minerals and addressing supply disruptions. The move is yet another step towards a U.S.-led critical minerals trade bloc. Washington has already agreed to similar action plans with both Japan and Mexico. China continues to dominate global supply chains for critical minerals like lithium and rare earth elements: 60% of production and 85% of refining capacity.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• War in the Middle East Spells Higher Inflation for U.S. Consumers
• The Best Precious Metals ETFs to Buy
• The Best Materials Stocks
• 5 Copper ETFs to Buy
• Is Investing In Gold Worth It? How Gold Prices Have Changed

A slowing labor market was the Federal Reserve's main focus in mid- to late 2025. Attention has shifted to inflation in 2026 as energy prices spike amid the ongoing conflict in the Middle East.

Since late February, when the war between the U.S., Israel and Iran began, oil prices have spiked to their highest level in four years and gas prices have jumped above $4.50 per gallon.

"No matter how long the Iran war goes on, the economy is bound to suffer from it," write David Payne and Matthew Housiaux of The Kiplinger Letter. "How much and how severely depends on just how long the conflict continues to crimp key energy exports."

And it's already taking its toll on consumers' purchasing power. According to the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) rose 0.6% from March to April and was 3.8% higher year over year, the highest annual increase since May 2023. In March, CPI was 0.9% higher month over month and up 3.3% year over year.

Energy costs had the biggest impact on the April CPI report. "The index for energy rose 3.8 percent in April, accounting for over forty percent of the monthly all items increase," wrote the BLS. Compared to the year-ago period, the energy index was up 17.8% and the gasoline index was 28.4% higher.

Food costs were also higher in April, as were those for household furnishings, airfares, personal care and clothing. The shelter index was higher, too, rising 0.6% month over month after "the BLS introduced a methodological fix to an issue caused by the federal government shutdown in late 2025," says Matt Colyar of Moody's Analytics.

"If it weren't for an unusually mild reading in health care costs, the April results would have been worse," says Kiplinger's Payne. "There will be a similar rise in energy costs for May, though shelter will return to its normal increase."

Economists were calling for headline inflation to be up 0.6% from March to April and 3.7% from the year prior.

Higher inflation will make the Federal Reserve more hesitant to lower interest rates — especially amid signs the labor market is stabilizing. According to CME Group FedWatch, futures traders don't expect any rate cuts at all in 2026. Earlier this year, betting odds were for at least one quarter-point cut.

What is the CPI?

"CPI is a measure of the average price of that basket of goods and services over time," writes Kiplinger contributor Coryanne Hicks. "The specific goods and services within the CPI basket are based on information around 24,000 families and individuals give the U.S. Bureau of Labor Statistics on what they buy."

The two primary measures of CPI are headline, which is the total inflation rate experienced by households, and core CPI, which excludes volatile food and energy prices.

Core CPI accelerated in April, rising 0.4% month over month and 2.8% year over year vs March's readings of 0.2% and 2.6%.

Economists expected core CPI to be up 0.3% on a monthly basis and 2.7% higher year over year.

So what does Wall Street think about the April CPI report? Here, we look at some of what economists, strategists and other experts have to say about the results and what they could mean for the Fed and investors going forward.

What Wall Street expected from the April CPI report

"Inflation is getting sticky and it's getting structural. Today’s report brings an unwelcome increase in services and shelter costs. Combined with the ongoing pressures from energy, this puts Kevin Warsh in a tough spot as he’s joining the Fed. Price pressures are compounding and driving core inflation higher." - David Russell, Global Head of Market Strategy at TradeStation

"Tuesday's CPI marks the second consecutive reading above 3%, suggesting that inflation is roaring back, largely driven by stubbornly high oil prices, which will dominate the inflation story for the rest of the year as the conflict continues to unfold in the Middle East. While this inflation is driven by oil prices and is not structural, it doesn't change the fact that consumers are paying higher prices, and as a result, we expect the Federal Reserve to be on hold through the summer on interest rates. More time and data are needed to assess future data and determine whether the Iran conflict and tariffs continue to pressure consumer prices." - Skyler Weinand, Chief Investment Officer at Regan Capital

"Fed fund futures markets are now pricing the chance of a rate hike at a better than a coin flip in March 2027. While rate hikes are possible should inflationary pressures continue to build, the potential for de-escalation of the conflict in the Middle East and muted strength in the labor market should keep the Fed on hold for the time being, with cuts still more likely than hikes in 2027 in our view." - Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"For the Fed, with two successively strong employment reports, it should be increasingly turning its gaze away from labor being a problem (which in our view is more of a supply issue than a demand one) toward inflation as the problem. Inflation was already broadly accelerating before the closing of the Strait of Hormuz, and this recent supply shock just exacerbates that underlying trend. New Fed Chair Kevin Warsh will certainly have a harder time framing this case for rate cuts in this environment." - Richard de Chazal, Macro Analyst at William Blair

"Unsurprisingly, energy drove a big increase in the headline rate. The Fed should view these inflation increases as transitory unless the administration responds with subsidies financed through increased deficit spending. President Donald Trump appeared to take a first step in this direction yesterday by promising to suspend federal gas taxes." - Stephen Coltman, Head of Macro at 21shares

"The firm April CPI print showed broad-based inflation across the economy in both headline and core measures, with elevated oil prices and tariff pass-through impacts evident. The Fed will get one more inflation print ahead of their June meeting, but with the strong trend in the jobs data, the balance of risks will likely force them to hold rates. However, prolonged stubborn inflation would increase the need for policy rate hikes and add pressure on a market already navigating geopolitical uncertainty and volatility." - Ryan Weldon, Investment Director and Portfolio Manager at IFM Investors

Related content

• 5 ETFs to Hedge Your Inflation Risk
• The Best Inflation-Proof Investments for Your Portfolio
• Recession-Proof Stocks: Best Stocks to Buy for a Recession
• How to De-Risk Your Portfolio in 5 Different Scenarios
• How Inflation Affects Your Finances and How to Stay Ahead

To help you understand what's going on in politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

The midterm elections are six months away. Here’s our early take on how things will go down.

Democrats have a chance to make big gains, with President Trump and his party reeling from sticky inflation and an unpopular war with Iran.

Republicans have lost ground with key groups of voters who helped power Trump to victory in 2024: Hispanics. Working-class white women. Gen Z men. And historically, the party controlling the White House tends to lose congressional seats during the midterms.

Democrats currently lead in the generic ballot, a rough measure of which party voters would prefer to control Congress, by about six points, on average. They should retake the House, where Republicans are down to a six-seat advantage after deaths, resignations and special-election losses.

How many seats they will gain is hard to say. While political conditions generally favor the Democrats, the party still must contend with its own image issues, as well as Trump’s persistent popularity with a small but loyal group of voters.

Redistricting has given Republicans a key advantage. While the legal issues are not completely settled, Republicans in several Southern states have drawn more GOP-friendly congressional maps in response to a recent Supreme Court decision narrowing the power of the Voting Rights Act. Democrats, meanwhile, have encountered legal setbacks in their efforts to do the same in Virginia.

Senate Democrats have a real possibility of flipping at least three GOP seats. In North Carolina, Democrat Roy Cooper comfortably leads his Republican rival, Michael Whatley. Maine Republican Senator Susan Collins is in the political fight of her life. The Ohio race, pitting GOP Senator Jon Husted against former Senator Sherrod Brown (D), is a toss-up. Dems also are bullish about their chances of defeating Alaska GOP Senator Dan Sullivan. Plus, Democratic candidates in key races are raising more cash than the Republicans.

The party needs to pick up at least four seats to gain control of the chamber, a tall order, given the rest of the Senate map. Republicans are defending more seats this year (22) than Democrats (13); however, all but one are in states that Trump won. By contrast, Dems are defending two seats in states that Trump won: Georgia and Michigan.

The odds still favor Republicans maintaining control of the upper chamber.

Whatever the results, expect the current gridlock in Washington to get worse. By controlling just one chamber of Congress, Democrats will effectively have a veto over future Trump legislative priorities and more opportunities to conduct oversight.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• Markets Will Always Be Volatile, Your Retirement Doesn't Have to Be
• Kiplinger Energy Outlook: Gas Prices Flare as Iran Standoff Continues
• Trump's Foreign Policy Overhaul

Rising oil prices have made inflation the more pressing concern for the Federal Reserve recently, though the employment side of its dual mandate bears watching amid volatility in recent nonfarm payrolls reports. That's why the April jobs report is a key economic report to monitor.

In January, for instance, the U.S. added 160,000 new positions. And in February, it lost a downwardly revised 156,000 jobs. March job gains came in at 185,000, upwardly revised from the initial report.

Job growth was positive in April, too. According to the Bureau of Labor Statistics (BLS), the U.S. added 115,000 new jobs last month, beating economists' estimate for 55,000 positions.

The industries seeing the biggest jobs gains included healthcare (+37,000), transportation and warehousing (+30,000), and retail trade (+22,000).

On the other hand, federal government jobs continued to decline, falling by 9,000 in April. Since peaking in October 2024, the U.S. has shed nearly 350,000 federal government positions.

The unemployment rate, which is derived from a separate survey, remained unchanged at 4.3%, as expected.

The jobs report also showed that average hourly earnings, a key measure of inflation, was 0.2% higher from March to April and up 3.6% year over year.

ADP jobs report came in higher than expected

On Wednesday, ADP's National Employment Report showed private payrolls rose by 109,000 in April — the strongest pace since early 2025. This was more than the 84,000 new jobs economists expected and the 61,000 private payrolls added in March.

Small and large-sized companies experienced the biggest increases in payrolls last month, but "we're seeing some softness in the middle," says Dr. Nela Richardson, chief economist at ADP. "Large companies have resources to deploy, and small ones are the most nimble, both important advantages in a complex labor environment."

Education and healthcare led the gains, adding 61,000 new jobs, while business and professional services saw the biggest decline, losing 8,000 positions.

With the April jobs report on the books, we looked at what economists, strategists and other experts on Wall Street have to say about the results and what they could mean for the Federal Reserve and investors going forward. You'll find these outlooks, edited at times for brevity, below.

Experts' takes on the April jobs report and what it means for the Fed

"While we're certainly not in the robust labor market we were a few years ago (and there are present and near-future risks), things seem to be stable for now. In the months ahead, we're likely to see some impact of higher oil prices on the labor market. Businesses only have so much money, and when a growing percentage of it must go to oil and oil-adjacent inputs, there's less to go towards hiring, raising wages and expansion. In addition to the airline industry, transportation and freight, and manufacturing could all experience this fallout, particularly if the conflict continues to drag on." - Elizabeth Renter, Senior Economist at NerdWallet

"Not the job print that makes cutting more likely. The Fed will shift its focus to containing upside inflation risks now that the labor market appears back on track. The Federal Open Market Committee could well feel compelled to remove the easing bias from its next post-meeting statement in June, which would suggest the hawks are gaining the upper hand on the committee for the time being. Strong data and inflation have likely put paid to any easing in the foreseeable future, though this could change depending on how energy prices and the situation in the Middle East develop." - Lindsay Rosner, Head of Multi-Sector Fixed Income Investing at Goldman Sachs Asset Management

"Friday's strong jobs report shows that the labor market is in the early stages of growing again, after a more than 6-month lull, which is welcome news for the economy and the stock market since employment is the lifeblood of our economy. Even with signs of life in the labor market, the Federal Reserve is likely to remain on hold when it comes to interest rates for the near-term to allow the inflationary and oil price spike to play itself out." - Chris Kampitsis, Managing Partner at Barnum Financial Group

"This morning's report reinforces the current steady state of the labor market and the broader economic pace. April's headline results and the muted revisions to the prior months' data support the view for monetary policy to remain in a neutral stance. The inflationary and economic impact of elevated energy prices will continue to be a key market driver moving forward, particularly as we enter the summer months that typically bring higher demand." - Jordan Rizzuto, Managing Partner and CIO at GammaRoad Capital Partners

"The economy is so much better than what the doom crew has been saying. There are a lot of headwinds – higher oil prices, sticky inflation and higher-for-longer interest rates – and yet the labor market is adding jobs, GDP is growing and corporate profits are expanding at a rapid pace. The stock market has been running to new highs and for those that were scratching their heads given all of the geopolitical uncertainty and supply shocks, the short answer is stock prices follow earnings and – at least for now – earnings are growing too quickly for the market to ignore." - Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"The U.S. jobs market continues to idle just above a stall. The three-month trailing employment gain (48k) appears just enough to absorb new supply – leaving the unemployment rate flat at 4.3%. The FOMC will just have to bide its time. Too soon to throttle up, too early to let off the choke." - Brad Conger, Chief Investment Officer at Hirtle & Co.

Related content

• What to Look Out for in Economic Data This Week
• Kevin Warsh Fed Chair Nomination: Live Updates and Commentary
• Kiplinger Economic Forecasts

The Senate voted on Wednesday to confirm Kevin Warsh to succeed Jerome Powell as Fed chair. Powell's term as Fed chair is scheduled to expire on Friday. And President Donald Trump would like Warsh to cut interest rates as soon as June 16-17, at the next Fed meeting.

But decisions about the federal funds rate are made by a committee. And the Fed chair is just one of 12 voting members of the Federal Open Market Committee. The FOMC includes the seven members of the board, the president of the Federal Reserve Bank of New York, and four other regional Fed bank presidents who serve one-year rotating terms.

Powell's term as a member of the Federal Reserve Board of Governors doesn't expire until January 31, 2028. And he's said he won't leave until an investigation of the central bank for cost overruns on a renovation project is "well and truly over, with transparency and finality" and will do what he thinks "is best for the institution and the people we serve."

As much as Powell's presence complicates the politics, any plans to cut (or raise!) the fed funds rate must gain the support of at least seven voting members of the FOMC. The Fed chair doesn't even have tie-breaking power.

Cutting interest rates is one thing he can't do right now or ever all by himself. But there are three things Kevin Warsh can do to change the Fed over the length of his initial four-year term.

The plot against the dot plot

Markets have grown accustomed to celebrity Fed chairs and the "transparency" they seem to support. They and their fellow members of the board are all over the place these days speaking in support of things like their quarterly Summary of Economic Projections (SEP).

President Trump takes it to another level when he says Warsh is "from central casting." The nominee himself seems to favor a lower profile, if perhaps only from a policy perspective. Indeed, as Deutsche Bank Chief U.S. Economist Matthew Luzzetti writes, "Consistent with his prior comments, Warsh was highly critical of Fed communications, especially forward guidance."

And it's mostly about the dot plot.

"The Fed tells the whole world what their dots are going to be, what their forecasts are going to be," Warsh said of the SEP during his testimony before the Senate Banking Committee. "Well, the Fed's human. And then they hold on to those forecasts longer than they should." Warsh alludes to "confirmation bias": our tendency to focus on information that supports our current view and exclude information that contradicts it.

"If the Fed were to wait until it gets into a meeting before making a decision," Warsh believes, "incremental deliberation can keep the central bank from compounding its errors." The dot plots, as Warsh sees them, promise transparency but, ultimately, undermine credibility. "I think these are big changes that are needed," the nominee told the committee, "and if confirmed, I look forward to doing it."

As Luzzetti notes, Warsh called for "regime change" in Fed communications. "That said," the economist adds, "he did not propose specific changes to these communication tools or practices." Nor did Warsh say whether he will or will not continue with post-FOMC-meeting press conferences.

"If you ask me my true personal opinion right now," Warsh said, "Fed chairs and other central bankers around the FOMC, they speak quite frequently. I would say this: I think truth-seeking is more important than repetition. If one has a press conference, one wants to deliver some important news."

A new inflation gauge

It's always a highlight on the economic calendar when the Bureau of Economic Analysis (BEA) releases fresh Personal Consumption Expenditures Price Index (PCE) data. The Fed prefers PCE over CPI as an inflation gauge basically because it's a broader and more flexible instrument for measuring real-time change. The Consumer Price Index (CPI) is a fixed basket of goods.

As Warsh sees it, neither PCE nor CPI is a sufficient barometer of price stability. He said during his confirmation hearing that his preferred instruments are "trimmed averages" that "take out all of the tail risks, all of the one-off items" to measure the "generalized change in prices."

A "trimmed-mean" average excludes a set percentage of the largest and smallest values in a dataset prior to calculation. Deutsche Bank economist Justin Weidner identifies "one clear benefit" to using them.

"Inflation is measured imprecisely," Weidner explains, "so excluding some of the 'noise' of large moves in smaller categories (which do not necessarily have to be food or energy categories) can provide a clearer picture of the trend." At the same time, as Weidner notes, "Fundamental to this is the premise that the inflation prints out in the tails are in fact noise and thus not informative about the trend."

Indeed, a May 2008 Dallas Fed staff paper (pdf) found that trimmed-mean averages are "more useful in low inflation environments, when the underlying signal is weak relative to the noise in the data." But they may not be able to capture changes in the inflation regime information in the tails may help identify.

Lender of last resort

Gillian Tett of the Financial Times raises a compelling question in the aftermath of Warsh's confirmation testimony: Who will organize a collective global response if another financial crisis hits? Tett refers to how Warsh answered a question asked by Sen. Jim Banks (R-Indiana) about the dollar and its position in the world.

"If confirmed as chairman of the Federal Reserve," Warsh replied, "I will then have to say that it's the Treasury secretary's business to talk about the dollar. It's the Fed chairman's business to talk about interest rates."

Elaborating on his position, Warsh conceded there are "risks to the U.S. position in the world, including economic" and from state actors. He highlighted the "economic statecraft agenda led by Secretary Bessent and Secretary Rubio," referring to the respective heads of the Treasury Department and the State Department.

"The Fed will play a supporting role in ensuring that the financial system is as safe as it can be and work with them," Warsh said, "because it's outside of the conduct of monetary policy to ensure the U.S. is on its front foot and in a position of strength during this period of rivalry between the U.S. and another nation around the world."

The war in the Middle East and its impact on oil prices has generated fears of another financial market crisis. Indeed, as Tett notes, Treasury Secretary Scott Bessent confirmed that the United Arab Emirates and "numerous" other states in the region have asked for dollar swap lines. Bessent and the Treasury extended a $20 billion swap line to Argentina in 2025.

Dollar swap lines were the critical tools then-New York Fed President Timothy Geithner used to calm financial markets during the global financial crisis in 2008-09, using existing arrangements with five central banks and temporary arrangements with nine others.

Warsh has signaled his agreement with the "geoeconomics" practiced by Trump, Bessent and Secretary of State Marco Rubio. A global risk here, as Tett writes, "is that dollar swap lines will become increasingly weaponised. For while the Fed has always tried to downplay the role of geopolitics in its own swap lines, Bessent says he wants to use swaps to promote American dominance and reward allies, 'locking in dollar supremacy'."

Related content

• 5 Stocks to Buy for a Trump Presidency
• 5 Core Stocks Every Investor Should Own in 2026 and Beyond
• Best Low-Risk ETFs to Replace CDs

To help you understand what's going on in business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

The Iran war has reinforced a new fact of life: The importance of drones in modern warfare. They’ve helped Tehran hold out against Washington and allowed Ukraine to hold its own against Russia.

The Pentagon is now trying to play catch-up as the U.S. prepares for a possible great-power conflict. Consider this simple cost comparison. Iran has forced the U.S. to use Patriot missiles ($4 million each) and THAAD interceptors ($12 million) to fend off swarms of $20,000-$50,000 Shahed drones, which is unsustainable in a longer conflict, especially with a foe as capable as China.

Other recent battlefield successes for the tech include Ukraine forcing Russian soldiers to surrender using only unmanned drones and robots. America lacks a robust drone industrial base compared with China, which accounts for roughly 90% of commercial drone production and controls most of the critical component supply chains. China’s DJI can make millions of reconnaissance drones per year. Skydio, the leading American drone manufacturer, can make thousands that cost three times as much. Note that Beijing is also catching up with the U.S. on more sophisticated drone technology used for both long-range strikes and spying.

Two noteworthy drone success stories: Ukraine and Taiwan. The former can produce 4.5 million drones per year, up from 5,000 in 2022 and deploy 9,000 of them per day in its fight against Russia. The latter is also ramping up output and exports, with the goal of increasing its production capacity to 180,000 units per year. Both countries have also managed to build China-free drone supply chains.

In response, Washington has launched its own Drone Dominance Program, a $1.1 billion effort with the goal of equipping the U.S. with hundreds of thousands of low-cost, weaponized drones by 2027. The Pentagon has purchased 30,000 so far after an initial competition involving 25 companies in February, ranging from start-ups to larger defense contractors like Kratos SRE and Neros. The agency is looking to buy at least 300,000 next year and start integrating them into U.S. battle plans.

More challenging than the drones will be building a reliable supply chain. The U.S. either relies on imports for key inputs, like sintered magnets (90% of which are made in China), or would struggle to scale up output at current domestic capacity. Case in point, the “brains” and “eyes” of drones depend on specialized semiconductors, like gallium-nitride power amplifiers, made at only a handful of Western facilities. The U.S. has taken some steps to address these issues, but still has a long way to go.

Don’t be surprised if Washington gets by with a little help from its friends. General Cherry, one of Ukraine’s largest drone manufacturers, recently struck a deal to build its products in the New Hampshire factories of U.S. defense contractor Wilcox Industries.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• The Best Industrial Stocks to Buy
• The Overlooked Chips Powering the AI Boom
• The Best Aerospace and Defense ETFs to Buy
• Warfare Revolution: How the Military Uses AI

The April Fed meeting wrapped up on Wednesday, April 29, with the central bank's latest policy decision.

With spiking energy prices lifting inflation and Federal Reserve Chair Jerome Powell at the end of his term, the central bank kept the federal funds rate unchanged this time around.

But Wall Street kept a close eye on the Federal Open Market Committee's (FOMC) statement and Chair Powell's press conference to see how concerned the central bank is about the lasting impact of higher oil prices.

Powell's surprising decision to remain on the Fed's Board of Governors for the time being was also a major storyline that emerged from the meeting.

The Kiplinger team reported live on the April Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Scroll for the latest updates.

How Does the Federal Reserve Work? | How Inflation Affects Your Finances and How to Stay Ahead | War in the Middle East Spells Higher Inflation for U.S. Consumers

Fed meeting schedule for 2026

The next Fed meeting, which runs from April 28 through April 29, marks the third gathering of 2026.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full remaining Fed meeting schedule for 2026:

April 28 to 29

June 16 to 17

July 28 to 29

September 15 to 16

October 27 to 28

December 8 to 9

The next Fed meeting will be Powell's last

On Friday, the Department of Justice (DOJ) dropped its investigation into Jerome Powell. The probe, launched in mid-January, threatened a criminal indictment related to Fed Chair Jerome Powell's testimony before the Senate Banking Committee last June about a multi-year project to renovate historic buildings.

Sen. Thom Tillis (R-North Caroline) said he would not vote to advance Kevin Warsh's nomination as Federal Reserve chair as long as the investigation continued, calling it "a bedrock principle of Fed independence."

Indeed, President Donald Trump has relentlessly criticized Chair Powell for not lowering interest rates, leaving many to speculate that the DOJ's investigation was a means of strong-arming the central bank.

But on Friday, U.S. Attorney Jeanine Pirro posted on X that she has directed her office to close its investigation of Powell and the Fed — clearing the way for Tillis to help move Warsh to a full Senate vote.

That vote is likely to come soon. Indeed, the Senate Banking Committee is scheduled to vote on Warsh's nomination this Wednesday, April 29, at 10 am Eastern Standard Time.

- Karee Venema

When does Jerome Powell's term as Fed chair end?

Jerome Powell's term as Fed chair is up on May 15, 2026.

In January, President Trump nominated Kevin Warsh to replace Chair Powell once his term is up. "Warsh was Fed Chair Ben Bernanke's right-hand man during the 2008-09 global financial crisis and was his primary liaison to Wall Street, which earned him credibility he still retains," writes Kiplinger investing editor David Dittman. "Markets see Warsh as a source of stability should Trump continue to pressure the central bank. He served on the Federal Reserve Board from February 2006 through March 2011."

With Warsh likely to be approved by the Senate, this makes the April Fed meeting the last for Jerome Powell as Fed chair.

Powell's term on the Board of Governors of the Federal Reserve runs through January 31, 2028. He has yet to confirm whether he will step down as Fed governor once his term as chair is up, as is customary. Rather, at the March Fed meeting, Powell said that he has "no intention of leaving the Board until the investigation is well and truly over, with transparency and finality,"

- Karee Venema

The policy backdrop is complicated right now

The Federal Reserve is widely expected to keep interest rates unchanged at the next Fed meeting. Not only is it Powell's last as Fed chair, but central bankers are trying to balance a complicated policy backdrop.

"On one hand, inflation has not yet fully returned to target, and the renewed rise in energy prices tied to the Iran conflict adds another layer of uncertainty," says Yulia Alekseeva, Head of Fixed Income at MissionSquare. "On the other hand, growth appears to be moderating, and there are early signs that the labor market may be losing some momentum beneath still-resilient headline data."

So policymakers are navigating a "narrow path," she explains — one where easing too soon could accelerate inflation, but "tightening preemptively" could create unnecessary headwinds for the economy.

"As a result, this meeting is less about whether the next move is a cut or a hike in the near term, and more about avoiding the wrong move altogether while preserving optionality," Alekseeva concludes.

- Karee Venema

Stocks are slightly lower to start Fed week

The main equity indexes are down slightly to start the week as market participants look ahead to Wednesday's policy announcement from the Fed and a busy stretch of Big Tech earnings.

After notching new all-time closing highs on Friday, the tech-heavy Nasdaq Composite and broader S&P 500 are down 0.2% and 0.1%, respectively. The blue-chip Dow Jones Industrial Average is off -0.1%.

Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.

Oil prices, meanwhile, were last seen higher, with front-month West Texas Intermediate crude futures up 1.9% to $96.16 per barrel. Over the weekend, President Donald Trump canceled plans for in-person negotiations in Pakistan between the U.S. and Iran.

- Karee Venema

Who gets to vote at the April Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2026 FOMC voting committee consists of:

Fed Chair Jerome Powell*

Vice Chair Philip Jefferson

Fed Governor Michael Barr

Fed Governor Michelle Bowman

Fed Governor Lisa Cook

Fed Governor Stephen Miran**

Fed Governor Christopher Waller

New York Fed President John Williams

Cleveland Fed President Beth Hammack

Minneapolis Fed President Neel Kashkari

Dallas Fed President Lorie Logan

Philadelphia Fed President Anna Paulson

In 2027, the presidents from Chicago, Richmond, Atlanta and San Francisco will rotate in as FOMC voting members, according to the Federal Reserve.

* Jerome Powell's term as Fed chair is up on May 15, 2026

** Stephen Miran's term as Fed governor was up on January 31, 2026, but he will continue to serve in the role until a successor is approved

- Karee Venema

March CPI came in hot as energy prices spiked

The ongoing conflict between the U.S., Israel and Iran has caused oil prices to spike to their highest level in four years and gas prices to soar above $4.00 per gallon, putting a quick halt to the decelerating inflation trend we've seen in recent years.

This was evidenced in the March Consumer Price Index (CPI) report, which showed a big boost to headline inflation.

According to the Bureau of Labor Statistics, headline CPI rose 0.9% from February to March, and was 3.3% higher year over year. This marked the highest annual increase since May 2024.

The results came in much higher than February's figures of 0.3% and 2.4%, and exceeded economists' estimates for a 0.8% monthly increase and a 3.1% annual rise.

Rising energy costs were the main reason behind the hot headline number. "The index for energy rose 10.9 percent in March, led by a 21.2-percent increase in the index for gasoline which accounted for nearly three quarters of the monthly all items increase," explained the BLS.

"This may be the best headline inflation number we see for a while as it may only partially capture the full force of the Iran conflict, which sent U.S. crude and U.S. gas up 70% at peak," said Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management. "We believe the Fed will look through the energy-driven noise so long as these factors hold. The Fed has room to be patient, and every reason to do so."

Core CPI, which excludes volatile food and energy prices, rose 0.2% from February to March, matching economists' expectations. Year over year, core inflation came in at a slower-than-expected 2.6%.

- Karee Venema

Read more: March CPI Report: Iran War Lifts Inflation to a 2-Year High

The labor market remains steady

Jobs reports have been volatile this year, but the overall picture of the labor market is one that's healthy but slowing.

In March, nonfarm payrolls jumped by 178,000, nullifying the downwardly revised decline of 133,000 jobs from February. In January, the U.S. added 126,000 new jobs.

"Gains were widespread in March. Private employment rose an even stronger 186,000," writes David Payne, staff economist and reporter for The Kiplinger Letter, in his Kiplinger jobs outlook. "Health care and social assistance was back to its usual strong hiring, adding 90,000. Leisure and hospitality added 44,000. Other hires included 26,000 in construction, 20,000 delivery drivers, 15,000 in durable goods manufacturing and 10,000 in retail."

The unemployment rate came in at 4.3% in March.

"The robust March jobs report should dissipate concerns at the Federal Reserve that the economy might be weakening," says Payne. "That means that rate cuts are off the table for the moment, at least until a new Fed chair takes over, possibly in May."

- Karee Venema

What Kiplinger economist David Payne is watching for in this week's Fed meeting

The Federal Reserve is likely to leave interest rates unchanged at its April 29 policy meeting. Inflation is a current worry, and the uncertainty of how long oil shipping will continue to be interrupted in the Persian Gulf will prevent the Fed from moving rates in either direction.

This meeting is also Powell’s last as chair, as his term ends on May 15, and the next Fed meeting is June 17. Kevin Warsh appears likely to be confirmed as the new chair by the Senate, as Sen. Tillis is dropping his opposition now that the Department of Justice suspended its criminal investigation of Powell.

The press conference on Wednesday is likely to focus on whether Powell will stay on as an at-large governor, though Powell will deflect all such questions, as usual. Powell does not have to leave the board entirely, as his term as a governor ends much later, on January 31, 2028.

It would be unusual for a former Fed chair to stay on as a governor, but not unprecedented. Martin Eccles stayed on for three more years after his chairmanship ended in 1948. Powell will likely want to stay on the board for a time to ensure that the investigation is truly over, as the Department of Justice said it reserved the right to restart it.

Powell staying on the board would mean that Trump could not immediately appoint his replacement, and would provide a counterweight to Chair Warsh's initiatives if Powell chose to do so.

- David Payne

Stocks close mixed Monday

Stocks were mixed to start a major week for earnings and interest rates. "Despite bouts of volatility," E*TRADE from Morgan Stanley Managing Director Chris Larkin observes, "for most of this month the showdown between geopolitical uncertainty and enthusiasm over AI-driven earnings growth has been a one-sided battle."

Indeed, the S&P 500 was up 9.8% from the end of March through Friday, the Dow Jones Industrial average 6.2% and the Nasdaq Composite more than 15%.

"This week could show whether the bulls' enthusiasm has been misplaced," Larkin notes. "If megacap tech leaders beat expectations, the market may continue to treat high oil prices and political tensions as more of a speed bump than a roadblock."

At the closing bell, the broad-based S&P 500 had added 0.1% to 7,173, another new all-time closing high, and the tech-heavy Nasdaq Composite had risen 0.2% to 24,887, also another new all-time closing high. But the blue-chip Dow Jones Industrial Average was down 0.1% to 49,167.

- David Dittman

Read more: Nasdaq Notches Another New All-Time High: Stock Market Today

Iran will keep the Fed in "wait and see" mode, says Johnson Investment Counsel's chief economist

The Fed is likely to continue its "wait and see" approach to interest rates that we saw to start 2026, says Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel. "While the Fed’s two key economic variables — labor market data and inflation — remain relatively unchanged from last month, the ongoing conflict with Iran makes forecasting both particularly difficult."

Zureick believes the FOMC will acknowledge that higher energy prices could keep inflation elevated. "While this would imply a lower likelihood of future rate cuts this year, economic research would also suggest higher prices at the pump may act to suppress future economic growth," he explains, adding that the Fed "will likely wait for a more decisive signal before taking any policy action."

Meanwhile, the expected confirmation of Warsh as the new Fed chair "clears a major uncertainty for investors looking for clues about future policy direction," the economist says. "If confirmed, Kevin Warsh will take over as the new Federal Reserve Chair on May 15. Most economists do not expect meaningful changes to policy under new leadership."

There will be no update of the Fed’s Summary of Economic Projections or “SEP” at the April meeting, which is often a point of emphasis for investors as it offers clues about the Fed’s assessment of the economy and predictions of future policy rates."

– Karee Venema

About the Fed's preferred inflation gauge

There's another big event on this week's economic calendar that appears to have its own leitmotif of "finality." That's the release on Thursday morning of Personal Consumption Expenditures Price Index (PCE) data for March.

For now, the Fed prefers PCE over CPI as an inflation gauge basically because it's a broader and more flexible instrument for measuring real-time change. The Consumer Price Index (CPI) is a fixed basket of goods.

As Kevin Warsh sees it, neither PCE nor CPI is a sufficient barometer of price stability. Warsh, President Donald Trump's nominee to succeed Jerome Powell as Fed chair, said during his confirmation hearing last week that his preferred instruments are "trimmed averages" that "take out all of the tail risks, all of the one-off items" to measure the "generalized change in prices."

A "trimmed-mean" average excludes a set percentage of the largest and smallest values in a dataset prior to calculation. Deutsche Bank economist Justin Weidner identifies "one clear benefit" to using them: "Inflation is measured imprecisely, so excluding some of the 'noise' of large moves in smaller categories (which do not necessarily have to be food or energy categories) can provide a clearer picture of the trend."

At the same time, as Weidner explains, "Fundamental to this is the premise that the inflation prints out in the tails are in fact noise and thus not informative about the trend."

Indeed, a May 2008 Dallas Fed staff paper (pdf) found that trimmed-mean averages are "more useful in low inflation environments, when the underlying signal is weak relative to the noise in the data." But they may not be able to capture changes in the inflation regime information in the tails may help identify.

– David Dittman

Should he stay or should he go now?

Fans of history and irony will note that the last Fed chair to linger on the Federal Reserve Board after their term in the top spot expired has their name on the building causing so much controversy up and down the Washington D.C.-Wall Street corridor these days.

According to FederalReserveHistory.org, Marriner S. Eccles served as Fed chair from November 15, 1934, through his resignation on January 31, 1948. Eccles stuck around on the board, initially at President Harry Truman's request, until July 14, 1951.

The Justice Department has ended its investigation of Jerome Powell and the Fed over cost overruns on a project to renovate the central bank's historic headquarters at 2051 Constitution Avenue NW, the Marriner S. Eccles Federal Reserve Board Building.

Powell said during his press conference following the March Fed meeting that he'd depart when the Justice Department investigation is "well and truly over, with transparency and finality." He also said he'd do “what I think is best for the institution and the people we serve.”

As Nick Timiraos of The Wall Street Journal reports, there is some question whether an ongoing investigation by the Fed's inspector general will provide the sitting Fed chair the comfort he needs to vacate the premises entirely.

"People who know Powell say that, after nearly 14 years at the Fed including eight as chair, he is more than eager to return to private life," Timiraos writes. "But agreeing to leave at a moment when the administration has been trying to push him out could, at least implicitly, validate the pressure campaign Powell has spent the past year avoiding."

Indeed, as Timiraos notes, "Each step the administration has taken in recent months has made the simple act of departing harder, not easier."

– David Dittman

Stocks are down on the first day of the April Fed meeting

Not even blue-chip strength could lift the oldest of the three main U.S. equity indexes into the green on Tuesday, and technology dragged on the relative newcomers amid questions about the durability of the market's major trend. A big earnings season is unfolding, the bottleneck at the Strait of Hormuz is unresolved and the April Fed meeting is underway.

At the closing bell, the Dow Jones Industrial Average was down 0.06% at 49,136, the broad-based S&P 500 had lost 0.5% to 7,138 and the tech-heavy Nasdaq Composite had shed 0.9% to 24,663.

That's despite good fundamentals. "We have a quarter of S&P 500 companies' reports in so far," Ritholtz Wealth Management CEO Josh Brown observes about the earnings calendar. And we're seeing the sixth consecutive earnings season of double-digit profit growth. "It's not accounting tricks. Revenue is higher for all 11 sectors."

Meanwhile, Jerome Powell has convened his final FOMC meeting as Fed chair and will host his final press conference as the leader of the world's most important central bank on Wednesday.

– David Dittman

Read more: Nasdaq Nosedives as OpenAI Is Off Target: Stock Market Today

Does the Bank of Japan's "hawkish hold" signal a trend?

The policy board of the Bank of Japan (BOJ) voted 6-3 to hold its benchmark steady at 0.75% on Tuesday. The BOJ was the first of five Group of Seven central banks to conclude its meeting this week, a rare convergence where monetary policy for about half of global GDP is up for discussion.

Based on the BOJ's discussion, it's safe to say all five will address the war between the U.S., Israel and Iran, the chokepoint at the Strait of Hormuz, interest rates and inflation.

"Japan is walking a stagflationary tightrope amid elevated energy prices," according to Yuxuan Tang, Asia head of rates and forex strategy at J.P. Morgan Private Bank, with the voting split suggesting "a high probability of a hike as soon as June."

As the BOJ noted in a statement announcing its decision, "It is necessary to pay particular attention to the impact of the future course of the situation in the Middle East on financial and foreign exchange markets on Japan's economic activity and prices."

The Bank of Canada (BOC) will conclude its meeting on Wednesday morning and announce its decision at 9:45 am Eastern Standard Time. The BOC will also release its quarterly monetary policy statement.

The Bank of England and the European Central Bank (representing France, Germany and Italy) will make their respective announcements at 7 am and 8: 45 am on Thursday.

Investors, traders and speculators basically expect all five central banks to leave their respective policy benchmarks unchanged. It's "wait and see" all over the world right now.

Markets will focus on what Fed Chair Jerome Powell, for one, has to say about the trajectory of the federal funds rate, for example, based on incoming economic data.

– David Dittman

Stocks signal a slightly higher open on Fed Day

The main equity indexes are signaling a slightly higher start this morning as market participants await this afternoon's policy statement from the Federal Reserve and a handful of Big Tech earnings due after the close.

At last check, futures on the blue-chip Dow Jones Industrial Average and the broader S&P 500 were fractionally higher, while futures on the tech-focused Nasdaq-100 were up 0.3%.

Energy prices were higher, too, with front-month West Texas Intermediate crude futures up 3.4% at $103.31 per barrel.

- Karee Venema

Big Tech earnings in focus this week, too

In addition to the Fed meeting, Wall Street will see earnings results from several Big Tech companies this week.

After tonight's close, four members of the Magnificent 7 — Alphabet (GOOGL), Amazon.com (AMZN), Meta Platforms (META) and Microsoft (MSFT) — will report, while Apple (AAPL) will disclose its March quarter results Thursday evening.

"Tech investors have taken comfort in rising earnings estimates that have toned down talk of a bubble by keeping P/E's in check even as stock prices climbed," says Dennis Follmer, chief investment officer at Montis Financial, "but any disappointing news from a Mag 7 company on Wednesday might just remind investors that there are still serious threats to the rosy future they have priced in."

And for investors, Follmer says the main question from this week's onslaught of Big Tech earnings is whether the AI train can keep the wind at the stock market's back. " Following a first quarter where the Mag 7 trailed the broader market, each of the four Mag 7 members reporting Wednesday are up approximately 20% or more since the March 30 lows," he notes.

The reactions to their earnings reports are "incredibly important to the broader market," Follmer adds.

Read more: Earnings Calendar and Analysis for This Week (April 27-May 1)

- Karee Venema

Where have all the Fed speakers been?

The Fed-speak has been nonexistent over the past week or so. That's by design. From Saturday, April 18, through Thursday, April 30, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits how much they can discuss the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s. It was formalized in 2011 and reaffirmed in January 2025.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2028.

- David Dittman

Consumers expect higher interest rates by year's end

The Conference Board on Tuesday released its Consumer Confidence Survey for April, which edged up to 92.8 from March's upwardly revised 92.2 reading.

"Consumer confidence edged up in April but was overall little changed, despite material concern about rising gasoline prices as the war in the Middle East prompted a surge in Brent crude oil prices," explained Dana Peterson, chief economist at The Conference Board.

Consumers' perception of the labor market and household income also improved, though expectations for business conditions declined.

And while survey respondents indicated they expect inflation to edge lower over the next 12 months, the outlook is still elevated. Additionally, nearly 50% of those surveyed believe interest rates will be higher a year from now.

This differs from market expectations. According to CME Group FedWatch, futures traders are currently pricing in an 86% probability that the federal funds rate will remain in the range of 3.5% to 3.75% through year's end. Odds are for the next move to be a quarter-point rate cut, coming in 2027.

- Karee Venema

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time today, April 29.

"Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated," the committee wrote in its March statement. "Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain."

As such, the FOMC voted to keep the federal fund rate unchanged at its current range of 3.5% to 3.75%.

This time around, Deutsche Bank economists expect the April Fed statement to "remain largely unchanged from March. The intermeeting data continue to support the Fed's description of growth as 'solid,' job gains 'low' but unemployment 'little changed' and inflation 'somewhat elevated.'"

- Karee Venema

Kevin Warsh will proceed to a full Senate vote

Earlier today, the Senate Banking Committee voted along party lines to advance Kevin Warsh's nomination for Federal Reserve Chair to a full Senate vote.

Sen. Thom Tillis (R-North Carolina) said he would not vote to advance Warsh until a Department of Justice investigation into current Fed Chair Jerome Powell was resolved. Following the DOJ's decision this past Friday to end the probe, Tillis confirmed that he was ready to vote yes.

Ahead of today's vote, Sen. Elizabeth Warren (D-Massachusetts), a ranking member of the Senate Banking Committee, said that advancing Warsh to a full vote in the Republican-controlled Senate "will bring the president one step closer to completing his illegal attempt to seize control of the Fed and to artificially juice the economy."

The full Senate vote is expected the week of May 11, with Powell's term as Fed chair ending on Friday, May 15.

- Karee Venema

Stocks fall, while oil prices and Treasury yields rise

With a little under an hour to go until the Fed releases its latest policy announcement, the main equity indexes are all in negative territory. At last check, the blue-chip Dow Jones Industrial Average is off 0.6%, the broader S&P 500 is down 0.3% and the tech-heavy Nasdaq Composite is 0.4% lower.

Among individual stocks selling, online trading platform Robinhood Markets (HOOD) is down more than 14% after its top- and bottom-line misses, while fintech firm SoFi Technologies (SOFI) is nearly 14% lower after its Q1 results.

Meanwhile, front-month West Texas Intermediate crude futures are trading up 7% at $106.91 per barrel after President Trump said the Strait of Hormuz blockade will continue until Iran agrees to a nuclear deal.

Over in the bond market, the yield on the 2-year Treasury note is up 7 basis points at 3.914%, while the 10-year Treasury yield is 4.8 basis points higher at 4.402%. (A basis point equals 0.01%.)

- Karee Venema

What time does Jerome Powell speak today?

Fed Chair Powell will host a press conference at 2:30 pm Eastern Standard Time today, April 29.

Deutsche Bank economists believe Chair Powell will likely focus on the war in the Middle East and its impact on inflation and the economy. "With uncertainty still pervasive, we expect he will emphasize that officials are unsure of the precise fallout from the war on the economy and monetary policy. However, Powell could highlight that persistent price pressures become more likely the longer oil prices remain elevated."

The economists also anticipate that Powell will comment on how the labor market has held steady and that higher oil prices are critical to the path of inflation from here.

"Powell could also be quizzed on the potential effects of AI on the economy – a topic that dominated market attention prior to the events in the Middle East," the group adds.

They do not expect Powell to comment on Kevin Warsh's nomination or confirm whether he will stay on as Fed governor.

- Karee Venema

The Fed decision is in

The Federal Open Market Committee has released its April policy statement, choosing to keep the federal funds rate unchanged at its current range of 3.5% to 3.75%.

Here's what changed in the April FOMC statement

Changes to the FOMC's latest policy statement include the following:

Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, on average, and the unemployment rate has been little changed in recent months. Inflation is elevated, in part reflecting the recent increase in global energy prices. (Previously read: Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.)

Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook. The Committee is attentive to the risks to both sides of its dual mandate. (Previously read: Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate.)

- Karee Venema

FOMC members were split on today's decision

Eight committee members voted in favor of today's statement, which was mostly boilerplate about how the Federal Reserve is committed to its goals, would act if events warrant and is paying close attention to all incoming data.

One committee member (Stephen Miran) wanted to lower interest rates and three (Beth Hammack, Neel Kashkari and Lorie Logan) wanted to go on record as being opposed to lowering rates at this time.

This shows the challenges that Kevin Warsh will have in trying to lower rates in the future.

Additionally, there was no update to the Fed's economic forecast at this meeting. An update will be published at the next meeting on June 17.

- David Payne

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

Prediction markets are split when it comes to Powell staying on as a Fed governor

Prediction markets are split on Powell staying on as a Fed governor in the short term. Kalshi bettors give Powell a 16% chance of stepping down before June, but Polymarket bettors give him 87% odds of leaving the Federal Reserve in May.

While his term as Fed chair is over on May 15, he has the option to stay on as Fed governor through early 2028.

- Karee Venema

Powell says he will stay on as Fed governor for now

"I will continue to serve as a governor for a period of time, to be determined," Fed Chair Jerome Powell announced in a surprising addition to his normal opening statement about the economy and the direction of monetary policy.

He said explicitly that he will not leave the Fed's Board of Governors until the suspended investigation into him by the Justice Department is completely over. So for now, that means that President Trump will not have another vacancy to fill at the Fed.

- Jim Patterson

Powell says his reason for staying on

When asked whether he is taking a political stand by deciding to remain on the board as a voting member of the Fed Board of Governors, and preventing the White House from appointing a replacement who would presumably be in line with the president's views on monetary policy, Powell was adamant in rejecting that premise.

He said he will work with incoming Chair Kevin Warsh, and emphasized that it's vital for the Fed to be free of political pressures.

- David Payne

Should the Fed still be signaling the potential for future rate cuts?

Turning to the outlook for future Fed interest rate decisions, Powell was asked whether it still makes sense for the Fed to indicate that it expects to cut rates at some point.

Several members of the FOMC voted to delete the language in its statement leaning toward a future rate cut, given that inflation has started to perk up again due to tariffs and rising energy prices.

Powell defended the decision to maintain the bias toward future easing, noting that most members of the committee voted to keep it. He said there is no pressing need to adjust how the Fed signals its future policy moves, given how uncertain the outlook for the blockade of the Persian Gulf's oil exports is right now.

- Jim Patterson

Should the Fed raise interest rates?

When asked by Michael McKee from Bloomberg about whether the Federal Reserve is considering raising interest rates because inflation is not coming down fast enough, Powell said the dissents were not a result of committee members supporting rate hikes.

Rather, the committee feels like it should remain neutral and doesn't need to rush to change interest rates right now.

- Karee Venema

Could high oil prices push core inflation up?

Could high oil prices push core inflation up? "We're just going to have to wait and see," Powell said.

He noted that inflation is "already kind of misbehaving," but it's too soon to know to what extent energy prices will seep into other costs, such as airfares.

"We're in a good place to wait and let things develop," he said. But the fact that he is even being asked about how much the standoff with Iran could contribute to inflation shows how unlikely it is that the Fed is going to be able to cut interest rates anytime soon.

- Jim Patterson

Powell says he won't be a shadow Fed chair

Jerome Powell is explicitly saying that he won't be a shadow Fed chair. He knows how hard it is to get the group to consensus, and he doesn't want to make it harder for Kevin Warsh.

Powell wants to feel like he's being constructive to the process, and respects the institution too much to try to throw in monkey wrenches.

He hopes that Warsh will do press conferences at every meeting, because otherwise, 18 committee members will be making their own statements.

- David Payne

"No one's calling for a rate hike"

"No one's calling for a hike" in interest rates right now, Powell said, when asked about the potential impacts of the Iran situation on inflation.

Gasoline prices are up sharply in the U.S., but other regions of the world are feeling much greater inflationary effects than the United States is. As an energy exporter, the American economy is somewhat insulated from the effects of the war and the loss of Middle East oil and gas exports. However, if the situation continues for an extended period, that could change.

- Jim Patterson

Consumer spending is the bigger risk to higher gas prices

Asked about the inflationary impacts of higher gas prices, Powell cautioned that the real risk could be to consumer spending.

When drivers spend more to fill their tanks, they have less discretionary income to spend on anything else. Spending on gas does not account for as big a share of household budgets as it used to, but when gas prices spike, it can still be a drag on both households' spending power.

Even if the actual financial hit is not that large, there can be a psychological effect that leads people to spend more carefully on other types of goods and services.

- Jim Patterson

Powell believes Fed independence will continue

When asked if Kevin Warsh will defend independence, Powell noted that is what the incoming Fed chair has said.

Throughout today's press conference, Powell has tried to avoid criticizing Trump directly, but has been blunt about the damage from legal assaults on the Fed. He is confident that Fed independence will continue. "Don't expect us to be perfect, but expect us to be politically unbiased."

- David Payne

The economy is "very resilient"

On how the economy is doing outside of uncomfortably high inflation, Powell called it "very resilient."

He did note that while unemployment is low, not a lot of new jobs are being created, and fewer people are quitting and creating openings for people who are unemployed and looking.

Those are concerns, but overall, he indicated the labor market is doing OK and the economy is growing. "Inflation is the thing we need to work on," he emphasized.

- Jim Patterson

Why is Fed independence so important?

When asked why Fed independence is so important, Powell said that the consequence of allowing elected politicians to control monetary policy is that they will always want low rates.

But lower rates would cause inflation over time, and markets would lose faith in low inflation.

You want monetary policy to focus on employment and inflation stability. The Federal Reserve works for the American people, not for a political party.

- David Payne

Despite consumer spending concerns, Americans are still spending

In his closing thoughts on the economy, Powell said that "people are still spending." The incoming data doesn't show a slowdown due to higher prices at the gas station.

He warned that that could change, though. Other parts of the world are suffering more, but that isn't having much effect on the U.S. yet, especially since trade is not a huge portion of America's economy.

And on that note, he closed the press conference, saying, for a change: "I won't see you next time."

- Jim Patterson

Markets will wait and see what Powell will do under Fed Chair Warsh

Stocks sagged ahead of the Federal Reserve's decision to maintain the current target range for the federal funds rate after President Donald Trump rejected a peace offer from Iran that would open the Strait of Hormuz. Central banks around the world are still waiting to see how the war in the Middle East will impact inflation and thus their respective policies on interest rates.

The Federal Open Market Committee (FOMC) voted 8-4 to keep the fed funds rate at 3.50% to 3.75%. "Inflation is elevated," the FOMC said in its policy statement, "in part reflecting the recent increase in global energy prices."

As for what comes next, the statement suggests the FOMC will build on its last move, a quarter-point cut in December: "In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."

At the closing bell, the Dow Jones Industrial Average was down 0.6% at 48,861, and the broad-based S&P 500 had lost 0.04% to 7,135. But the tech-heavy Nasdaq Composite rallied late to post a 0.04% gain to 24,673.

– David Dittman

Read more: Markets Are Mixed Amid Fed Uncertainty: Stock Market Today

April Fed meeting ends with uncertainty, says Johnson Investment Counsel's chief economist

The Fed didn't shock anyone with today's decision to keep interest rates unchanged,  says Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel. "The official statement left the door open to future rate cuts, citing the assessment of incoming data, the evolving outlook, and the balance of risks as factors influencing future decision making." 

In a surprising move, though, four officials dissented against the Fed’s official decision, the first time this has happened since 1992, he says. Governor Miran favored a 25-basis-point rate cut. On the other hand, Governors Hammack, Kashkari and Logan dissented, citing disagreement with the "easing bias" in the Fed’s post-meeting statement, Zureick explains

The economist adds that while the door is open for Kevin Warsh to become the next Fed Chair, Jerome Powell committed to staying on as a governor after his term as chair ends next month.

"Overall, there is disagreement amongst Fed officials regarding the future direction of policy rates," Zureick points out. "Adding to uncertainty, investors will need to become acquainted with new leadership next month. As the war in Iran drags on, concern over the impact on future inflation prints will likely intensify, reducing the likelihood of near-term rate cuts."

- Karee Venema

In late January, President Donald Trump nominated Kevin Warsh to replace Jerome Powell as Federal Reserve chair when his term ends in May.

Warsh met with the Senate Banking Committee on Tuesday, April 21, marking the first step in his path to confirmation.

Fed independence was one topic that the Senate Banking Committee drilled Warsh on. His recent financial disclosures, which show roughly $100 million in assets he would need to divest to comply with ethics regulations, was another.

The Kiplinger team is reported on Warsh's path to confirmation, bringing you the news and our expert analysis of what this means for the Fed, the economy and your money. Scroll for the updates.

Why the Next Fed Chair Decision May Be the Most Consequential in Decades | How Does the Federal Reserve Work? | Quiz: How Well Do You Know the Fed?

Who is Kevin Warsh?

Kevin Warsh was Fed Chair Ben Bernanke's right-hand man during the 2008-09 global financial crisis and was his primary liaison to Wall Street, which earned him credibility he still retains.

Markets see Warsh as a source of stability should Trump continue to pressure the central bank. He served on the Federal Reserve Board from February 2006 through March 2011.

He was special assistant to the president for economic policy and executive secretary of the White House National Economic Council from 2002 through 2006, during the George W. Bush administration. From 1995 to 2002, Warsh worked for Morgan Stanley.

He's currently a visiting fellow in economics at Stanford University's Hoover Institution, a lecturer at the Stanford Graduate School of Business and a member of the Panel of Economic Advisers of the Congressional Budget Office.

Warsh is widely viewed as a "hawk" on monetary policy who generally favors higher interest rates rather than the risk of inflation.

At the same time, Warsh, who was said to be a candidate for Treasury secretary before Trump picked Scott Bessent, was on the short list because he has a great relationship with the president.

Warsh said in mid-2025 that "the independent operations in the conduct of monetary policy is essential," adding "that doesn't mean the Fed is independent in everything else it does."

Though he consistently took the hawkish line on inflation during his time inside the central bank, Warsh has more recently advocated for lower interest rates.

- David Dittman

Trump nominated Warsh in January

After months of speculation — and years of criticizing his last pick — President Donald Trump announced on January 30 that he would nominate Kevin Warsh to replace Jerome Powell as Fed chair when his term ends.

Trump had been reviewing several candidates before he made his official announcement.

"I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM," Trump wrote on Truth Social. "I have known Kevin for a long period of time and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is 'central casting,' and he will never let you down."

- David Dittman

Why has Sen. Tillis vowed to block Warsh's nomination?

Republican Sen. Thom Tillis from North Carolina, a member of the Senate Banking Committee, has vowed to block any Federal Reserve nomination until a Department of Justice probe into current Fed Chair Jerome Powell is resolved.

In January, the DOJ served the Federal Reserve with grand jury subpoenas and threatened a criminal indictment related to Chair Powell's congressional testimony last June about a multi-year project to renovate historic buildings.

In early April, Chief Judge James Boasberg of the U.S. District Court for the District of Columbia blocked those subpoenas, writing that there is "abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the president or to resign and make way for a Fed chair who will."

Boasberg also rejected a request from Jeanine Pirro, U.S. attorney for the District of Columbia, to reconsider the ruling. Pirro has until early May to appeal.

"This is about a bedrock principle of Fed independence," Tillis told reporters in March. "The reason why I came out so strong so early is I believe that we, I, have no earthly idea what the market reaction would have been if suddenly the perception is that the Fed chair serves at the pleasure of the President, right?"

Tillis also called the administration's efforts to fire Fed Governor Lisa Cook "sophomoric." However, the senator said he is "already impressed" with Warsh.

- Karee Venema

When does Jerome Powell's term as Fed chair end?

Jerome Powell's term as Fed chair is officially up on May 15, 2026.

After the March Fed meeting, Powell said that if his successor is not confirmed by the time his term ends, he will serve as Chair pro tem until his successor is confirmed. "That is what the law calls for, that's what we’ve done on several occasions — including involving me — and that’s what we’re going to do in this situation," he explained.

Powell's term on the Federal Reserve's board of governors does not expire until January 31, 2028. While he has not confirmed if he will stay on the board through early 2028, he said he will not leave until the Department of Justice's investigation into him is "well and truly over, with transparency and finality."

However, President Trump said earlier this month that he won't drop the probe into Powell and threatened to fire him if he doesn't resign once Warsh is confirmed.

- Karee Venema

Warsh promises Fed independence will remain intact

Kevin Warsh does not feel that the Federal Reserve's independence is at risk when President Trump repeatedly calls for the central bank to lower interest rates.

"I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators, or members of the House — state their views on interest rates," Warsh wrote in his prepared opening statement for Tuesday's testimony, as reported by Politico. "Central bankers must be strong enough to listen to a diversity of views from all corners."

Warsh also states that he is committed to the Fed's dual mandate of price stability and maximum employment "without excuse or equivocation, argument or anguish."

- Karee Venema

Warsh believes AI will lower inflation, but he faces an uphill battle convincing the bond market

Federal Reserve chair nominee Kevin Warsh believes that strong productivity growth from the adoption of artificial intelligence will lower inflation as production costs decline (once the Iran war is resolved), allowing for lower short-term and long-term interest rates. Thus, he is basically a supply-sider.

However, we do not believe that Warsh will be able to convince the other members of the Fed's policy-making committee to agree to his views. Also, the bond market is not likely to agree, either, which means that even if Warsh is able to lower short-term rates through Fed action, he will not be able to convince the bond market.

Long-term interest rates such as the 10-year Treasury note have risen, not declined, since the Fed started cutting short-term interest rates in September 2024. Long-term rates are not likely to decline this year unless the Iran war causes the economy to suffer.

- David Payne

Where can I watch the Kevin Warsh confirmation hearing?

Kevin Warsh will begin his live testimony in front of the Senate Banking Committee at 10 am Eastern Standard Time today, April 21.

Several media outlets will be live-streaming the hearing on their respective websites and YouTube channels, including CNBC. You can watch it here.

Stocks trade higher ahead of Warsh testimony

Stocks are trading higher Tuesday morning after President Donald Trump said he expects the U.S. to make "a great deal" with Iran.

At last check, the blue-chip Dow Jones Industrial Average is outperforming its peers, up 0.8% as UnitedHealth Group (UNH) jumps 9% on a beat-and-raise quarter. The broader S&P 500 and tech-heavy Nasdaq Composite are both up 0.2%.

- Karee Venema

Sen. Tim Scott calls the committee to order

Republican Sen. Tim Scott calls the Senate Banking Committee to order and thanks Kevin Warsh for meeting with them today.

He says that this is about "kitchen table issues" and that Americans want and should have confidence in our institutions.

"Monetary policy choices made at the Federal Reserve can affect Americans' ability to buy groceries, whether or not they can afford a home, how far their paycheck goes, especially at the end of the month," Scott adds.

- Karee Venema

Confirmation hearing begins

The confirmation hearing has begun for Kevin Warsh, with Sen. Tim Scott (R-South Carolina), chair of the banking panel, giving a speech saying Warsh should be confirmed, touching on themes of "affordability" for the people and the importance of the Fed.

Sen. Elizabeth Warren (D-Massachusetts) takes the floor next, saying, in contrast, that this hearing should not be happening due to "one economic failure after another" from the Trump administration and what she calls Trump's attempt to control the Fed.

- Alexandra Svokos

Sen. Warren mentions consumer sentiment, which just hit its lowest level on record

Sen. Elizabeth Warren (D-Massachusetts) begins by saying President Trump has "racked up one economic failure after another," noting that consumer sentiment just hit its lowest level on record.

Warren is referring to the University of Michigan's Consumer Sentiment Index, which plunged plunged 11% from March to April to 47.6 — the lowest reading on record.

"Assessments of personal finances declined about 11%, with consumers expressing a substantial increase in concerns over high prices and weaker asset values," explains Joanne Hsu, director of the monthly Surveys of Consumers. "Buying conditions for durables and vehicles worsened, again on the basis of high prices. Open ended comments show that many consumers blame the Iran conflict for unfavorable changes to the economy."

However, Hsu notes that nearly all responses for the preliminary reading were gathered before the temporary ceasefire was announced on April 7. "Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated," she says.

- Karee Venema

Sen. McCormick introduces 'my friend'

Sen. Dave McCormick (R-Pennsylvania), is up next, giving a speech introducing his "friend" Warsh, calling him "the ideal candidate to lead the Fed at this crucial juncture." After a brief review of Warsh's career, McCormick goes back to a theme Scott discussed: Affordability for "everyday Americans."

He speaks of Warsh as someone who would shake up a "stagnant" Fed, doing something more than using what he calls outdated models for decision-making.

Here we go

Warsh has now been sworn in, and we can get into the actual testimony.

Warsh delivers his opening statement

Now sworn in, Warsh delivers his opening statement, which was distributed earlier this morning. As is typical of a confirmation hearing, he begins with personal remarks, talking about his wife and marriage, as well as his background growing up, to humanize himself before we get into questions and to review his professional background.

He then speaks clearly to the issue Warren discussed: The independence of the Fed. Here, he's walking a fine line between appeasing worried senators and the president at the same time.

"So let me be clear: Monetary policy independence is essential," he says, followed shortly thereafter by: "I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators or members of the House — state their views on interest rates."

Later on in his opening statement, he speaks to what McCormick was referring to: An apparent inclination towards shaking up the Fed. He says: "Status quo practices and policies are especially harmful when the world is changing fast. If confirmed as chairman, I will seek to bring the experience of a one-time insider and the questioning spirit of an outsider. I will keep the Fed mindful of its limits, focused on its mission, and delivering on its mandate."

- Alexandra Svokos

The question and answer portion begins

Warsh has concluded his opening remarks, with the committee now moving on to the question-and-answer portion of the hearing.

Sen. Scott asks about affordability issues

Rep. Scott begins the Q&A portion of the hearing by asking Warsh about how the Fed will address affordability.

Warsh responds that there's no more pressing concern than affordability, noting that pandemic-era price spikes affected nearly all Americans. "Once you let inflation take hold in the economy, it's more expensive and harder to bring it down."

He calls this a "fatal policy error" and believes we need reforms to fix it. And while inflation is less severe than where it was a few years back, higher prices are still something Americans still managing.

- Karee Venema

Warren and Warsh spar over investments

Sen. Warren's opportunity for questioning almost immediately gets heated. She has asked Warsh about what he's invested in, including if his investments go towards anything nefarious. She presses Warsh that her questions are "yes or no," which he does not follow. The two speak over each other repeatedly, with Warsh saying he's been generally following ethics.

After that spar, Warren asks if Trump lost the 2020 election. Warsh responds by saying he's trying to keep politics out of monetary policy.

Warren then asks Warsh to name one disagreement he has with Trump's economic policy. He declines to answer, instead giving a cute response that he disagrees with Trump's assessment that he's "out of central casting."

- Alexandra Svokos

Warsh agrees with Sen. Warren on independence

Sen. Warren concludes her Q&A saying "we need a Fed chair that is independent. It is the only way we preserve the independence of the Federal Reserve."

Warsh: "I agree with you on independence Senator."

- Karee Venema

Sen. Rounds and Warsh talk divestments

Sen. Mike Rounds (R-South Dakota) asks Warsh about working with ethics committees and divesting his financial assets. Warsh confirms that he is "going above and beyond" and has agreed to divest "virtually all of my financial assets" in order to "reestablish the credibility of the Fed."

Warsh says the majority of assets will be divested before he is confirmed, with the rest occurring within 90 days of confirmation.

- Karee Venema

Sen. Warren notes that Warsh is currently out of compliance

Sen. Warren notes that Warsh is currently out of compliance with the U.S. Office of Government Ethics certification, though Sen. Scott says "what has been clearly articulated" is that he intends to do what he must to be in compliance.

- Karee Venema

Tillis chooses to not ask questions, speaks to his vow to block the nomination

In his turn to ask questions, Sen. Thom Tillis (R-North Carolina), says he will not be asking questions but instead will speak to why he has vowed to block Warsh's nomination, despite supporting him as a nominee. He brought props (exciting!) - print-outs of quotes and slides.

First up, he speaks about the controversial building renovations, which Trump has attacked Powell on. Tillis says it's clear why this project went over-budget, due to the rising costs of materials and structural problems that came up during the work. "Unfortunate, but legitimate," he says of the costs going overbudget.

Then, he gets into the investigation into Powell, saying someone thought they would be "cute" by opening it. If not for this investigation, he says, Tillis would be able to move forward and this process would not be held up.

"We've got to end this investigation," Tillis says. "Let's get rid of this investigation so I can support your nomination."

- Alexandra Svokos

Sen. Kennedy asks about Trump and rate cuts

Sen. John Kennedy (R-Louisiana) continues the questioning on Warsh's divestment of his assets, saying if he refuses to sell them, both Congress and the ethics committees will know.

Kennedy also asks if politicians have the right to give their opinion on interest rates and monetary policy. The senator notes that the opinions of some politicians, namely the president, matter more than others.

While President Trump has made his feelings on interest rates loud and clear, Warsh says his credibility as Fed chair is the most important thing to him, the institution and the success of monetary policy. He adds that Trump has not asked him to commit to "any interest rate decision, period."

- Karee Venema

This is a pretty good hearing

I've watched a whole lot of C-SPAN in my time as a news and politics editor, and often hearings like this can be boring. Even in divisive times, that divisiveness can get, well, really, really boring. It falls into a pattern of Dems saying their talking point, Republicans saying theirs, the nominee barely talking, and we repeat that for a few hours.

This one, though, is slightly more interesting, with multiple storylines playing out at the same time. You've got the cross-aisle divisiveness, as usual, but also some real, thorough conversation about the economy (particularly between Warsh and Sen. Catherine Cortez Masto (D-Nevada)). Then you've got the debate over if Warsh can be independent. He says he can and will, but, some senators have pointed out, the president has been making the case that he can't and won't. Warsh, meanwhile, is walking this fine line of trying to ascertain his independence while trying not to tick off the president.

You've got a Republican, Tillis, on track to block this nomination due to political problems outside of the scope of this room, which is just an interesting plot twist, and you've got Warsh saying he respects the mandate of the Fed while also saying he wants to shake things up, like by getting new inflation data to make decisions differently.

And what we're seeing in Warsh is a slight contrast to what we see in Powell. Powell has developed a masterful ability to turn down questions and give quick, clipped responses that don't give the asker much to work with. Of course, a confirmation hearing is different from a press conference, but we're seeing some inclination to fight back from Warsh, rather than do a version of pleading the fifth.

Time is flying by, and we're actually getting some interesting conversations going on.

- Alexandra Svokos

Sen. Hagerty asks about Warsh's prior Fed experience

Sen. Bill Hagerty (R-Tennessee) asks Warsh about his prior Fed experience and how it will shape his time as Fed chair. Warsh says his experience at the Federal Reserve and understanding of the people will allow him to hit the ground running and give him a leg up.

He adds there's a short window to bring inflation down to where it should be. And because AI is so consequential and "is quickly becoming something like escape velocity," it's important to revisit models to see what this new technology means for the Fed's dual mandates — price stability and maximum employment.

- Karee Venema

Should digital assets be included in our financial industry?

Sen. Cynthia Lummis (R-Wyoming) asks Warsh a "quick yes or no" on whether digital assets should be incorporated into our financial industry to provide Americans with "new investment opportunities."

Warsh responds that they already are.

- Karee Venema

Sen. Andy Kim revisits the topic of affordability

In a heated exchange with Warsh, Sen. Andy Kim (D-New Jersey) brings up the topic of affordability, asking the Fed chair nominee if he agrees that Americans are struggling to pay their bills.

Warsh demurs, saying it's not the role of the central bank to second-guess what folks are feeling and seeing in their own lives. However, he says the Fed has some responsibility for that and the "legacy of inflation" from recent years is the "biggest economic policy error in 40 or 50 years."

He admits that inflation is "less problematic than it was a few years ago," but would not admit that affordability remains an issue.

- Karee Venema

Warsh calls inflation a "regressive tax"

Answering to Sen. Pete Ricketts (R-Nebraska), Warsh calls inflation "the most regressive tax that anyone in Washington could come up with," saying it does "the most harm to the least well-off among us."

Ricketts asks Warsh if inflation comes from lofty federal spending, to which the Fed chair nominee agrees. He adds that printing too much money also accelerates inflation.

- Karee Venema

How will AI impact Warsh's outlook for interest rates?

Near the end of her time, Sen. Lisa Blunt Rochester (D-Delaware) asks Warsh how much of his view on interest rates depends on production gains from AI.

Warsh says it has two elements. One is the increase in capital expenditures to build data centers, which will boost demand. The other is on the supply side of the economy, with the increase in potential output, which could be considerably bigger — we just don't know at this point.

He adds that the Federal Reserve needs to do a lot of work to prepare for this productivity wave.

- Karee Venema

Warsh answers questions about Lisa Cook

Sen. Angela Alsobrooks (D-Maryland) asked Warsh if he would plan to stand by and defend the tenure of Fed Governor Lisa Cook, who Trump tried to fire. In response, Warsh essentially sidestepped, saying, "If I stand for anything, it's [that] the Fed should stay in its lane. As I understand that matter, it's pending before the United States Supreme Court. I think it's inappropriate for me to weigh in on that, especially because, in the event that I am confirmed, I could be party to that matter."

Alsobrooks disagreed, saying, "This is your future colleague, who is confirmed by both this committee and this Senate to serve her country. Chairman Powell has defended her tenure, and your answer to this is you will not defend her, is that correct?"

Warsh said no, he is simply standing by to hear what the Supreme Court says. Alsobrooks then asked about the Powell investigation, to which Warsh again said he will abide by the judgment of the courts.

- Alexandra Svokos

The hearing has concluded

The verbal portion of Warsh's testimony to this committee has now been adjourned. The senators have the opportunity to ask questions in writing after this, but for now, our fun is done.

Warsh stands and shake hands as he leaves the room.

Next steps for Warsh

Kevin Warsh will now answer written questions from the Senate Banking Committee, with his responses due by April 23.

In order to move to a full Senate vote, Warsh will need approval from the majority of the committee, which is made up of 13 Republicans and 11 Democrats. If Tillis refuses to advance Warsh, the vote will be 12-12, meaning his nomination for Fed chair will fail to move forward.

- Karee Venema

Is Kevin Warsh right about Fed independence?

Of course Kevin Warsh said interesting things during his introductory hearing before the Senate Banking Committee on Tuesday. He also avoided saying things off script for the existing drama.

That's fair to expect of a nominee "from central casting," as President Donald Trump described his choice to succeed Fed Chair Jerome Powell.

There's substance, too, even amid – maybe even augmented by – D.C. theatrics. Take this issue of Fed independence.

The way Sen. Thom Tillis (R-North Carolina) frames it, once a Justice Department investigation of cost overruns for a project to renovate the central bank's historic buildings is resolved, it's basically no longer an issue.

As Politico reports, resolution could include the Justice Department referring the matter to a congressional committee.

Tillis, who also underscored how critical it is for a chair to build consensus inside the central bank, is a "yes" on the merits. If the DOJ agrees to let Congress take over the renovation investigation, it's Fed Chair Kevin Warsh in time for the June FOMC meeting.

As Warsh himself noted (an aside it was, really), what the president is doing right now in public is what presidents have always done in private.

Way back in the day, in fact, when he was worried about funding both the Great Society at home and the war in Vietnam, down at his ranch in Texas Lyndon Johnson literally assaulted William McChesney Martin about interest rates.

LBJ wasn't asking Martin to raise them. He wasn't the first president to try to impose his will on a central banker. And plenty between him and Trump did the same.

At the same time, Sen. Elizabeth Warren (D-Massachusetts) sees "independence" along another line. Warren would like to know how Warsh will dispose of assets on his personal balance sheet, as agreed with federal ethics officials.

Warren is a "no" no matter what. But perhaps her constituents and other Americans would like to know to whom their top central banker is beholden, if not just their president. Tillis is comfortable with Warsh's existing agreement with ethics officials.

Meanwhile, the nominee represents a real agent of "regime change" (that line kills these days, in almost any context) for the central bank, maybe even because he was inside when a lot of the things he now wants to undo were being done.

Indeed, reducing the Fed's balance sheet and re-centering the federal funds rate as the primary tool of monetary policy is kind of a big shift, actually, and it'll leave a mark on the bond market if/when it happens.

Warsh would change the way the Fed talks about monetary policy, too, including making rate and growth forecasts that in his conception only inhibit free decision-making from FOMC meeting to FOMC meeting.

Things are different in this era of celebrity Fed chairs, ushered in by Bob Woodward when he wrote about "The Maestro" Alan Greenspan at the end of the 20th century.

Still, it's hard to find a more fraught confirmation process.

We're going to keep following it, and we're going to look at things like the general public's faith in the Fed, whether Warsh is the chair to restore it and what his ideas mean for inflation and jobs.

– David Dittman

Why Warsh would disrupt the Fed's dot plots

Markets have grown accustomed to celebrity Fed chairs and the "transparency" they seem to support.

They and their fellow members of the Federal Reserve Board of Governors are all over the place these days speaking in support of things like their quarterly Summary of Economic Projections (SEP).

President Donald Trump takes it to another level when he says Kevin Warsh, his nominee to replace Jerome Powell, is "from central casting."

The nominee himself seems to favor a lower profile, if perhaps only from a policy perspective.

Indeed, as Deutsche Bank Chief U.S. Economist Matthew Luzzetti writes, "Consistent with his prior comments, Warsh was highly critical of Fed communications, especially forward guidance."

And it's mostly about interest rates and the dot plot.

“The Fed tells the whole world what their dots are going to be, what their forecasts are going to be," Warsh said of the SEP during his testimony before the Senate Banking Committee on Tuesday. "Well, the Fed’s human. And then they hold on to those forecasts longer than they should.”

Warsh alludes to a very human frailty known as "confirmation bias": the tendency we have to focus on information that supports our current view and exclude information that contradicts it.

“If the Fed were to wait until it gets into a meeting before making a decision," Warsh believes, "incremental deliberation can keep the central bank from compounding its errors."

The dot-plots, as Warsh sees them, promise transparency but, ultimately, undermine credibility. "I think these are big changes that are needed," the nominee told the committee, "and if confirmed, I look forward to doing it.”

As Luzzetti notes, Warsh called for “regime change” in Fed communications. "That said," the economist adds, "he did not propose specific changes to these communication tools or practices." Nor did Warsh say whether he will or will not continue with post-FOMC-meeting press conferences.

“If you ask me my true personal opinion right now," Warsh said, "Fed chairs and other central bankers around the FOMC, they speak quite frequently. I would say this: I think truth seeking is more important than repetition. If one has a press conference, one wants to deliver some important news.”

– David Dittman

The path is clear for Kevin Warsh to replace Jerome Powell

In a post on X shortly after 10 am Eastern Standard Time, U.S. Attorney Jeanine Pirro said she has directed her office to close its investigation of Jerome Powell and the Fed for cost overruns on a project to renovate its historic buildings in Washington D.C.

According to Pirro, "The Inspector General for the Federal Reserve has been asked to scrutinize the building costs overruns – in the billions of dollars – that have been borne by taxpayers."

As Nick Timiraos of The Wall Street Journal notes, "Powell already asked the Fed’s inspector general to review the building project in July, and that work is ongoing. The IG published findings of an earlier audit of the renovations in 2021."

Nevertheless, Pirro's move appears to clear the way for Sen. Thom Tillis (R-North Carolina) to vote "yes" on President Donald Trump's nominee to replace Powell as Fed chair, Kevin Warsh.

"You have extraordinary credentials," Tillis said to Warsh during his questioning of the nominee on Tuesday. "They’re impeccable. Let’s get rid of this investigation, so I can support your confirmation."

– David Dittman

The Senate Banking Committee votes to move Kevin Warsh's nomination to a full Senate vote

Earlier today, the Senate Banking Committee voted along party lines to advance Kevin Warsh's nomination for Federal Reserve Chair to a full Senate vote.

Sen. Thom Tillis (R-North Carolina) said he would not vote to advance Warsh until a Department of Justice investigation into current Fed Chair Jerome Powell was resolved. Following the DOJ's decision this past Friday to end the probe, Tillis confirmed that he was ready to vote yes.

Ahead of today's vote, Sen. Elizabeth Warren (D-Massachusetts), a ranking member of the Senate Banking Committee, said that advancing Warsh to a full vote in the Republican-controlled Senate "will bring the president one step closer to completing his illegal attempt to seize control of the Fed and to artificially juice the economy."

The full Senate vote is expected the week of May 11, with Powell's term as Fed chair ending on Friday, May 15.

- Karee Venema

Jerome Powell will stay on as Fed governor

The April Fed meeting came and went with the Federal Open Market Committee (FOMC) voting to keep the federal funds rate unchanged at its current range of 3.5% to 3.75%.

However, this marked the largest dissent from committee members since 1992, with Fed Governor Stephen Miran voting instead for a quarter-point rate cut and Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan stating that they "did not support the inclusion of an easing bias in the statement at this time."

Jerome Powell also offered a surprise at his last press conference as head of the central bank, saying he will stay on the Federal Reserve's Board of Governors once his term as Fed chair is up on May 15.

“I've said that I will not leave the board until this [Department of Justice] investigation is well and truly over with transparency and finality," Powell said, "and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully."

The DOJ on Friday, April 24, dropped its investigation into Powell over testimony before the Senate Banking Committee last June about a multi-year project to renovate historic buildings. However, U.S. Attorney General Jeanine Pirro said her office reserves the right to restart the criminal probe once the Fed's inspector general reviews the cost overrun associated with renovations.

- Karee Venema

Can Kevin Warsh cut interest rates when he's confirmed?

The Senate is on track to confirm Kevin Warsh to succeed Jerome Powell as Fed chair by Friday, May 15. That's when Powell's term as Fed chair is scheduled to expire.

And President Donald Trump would like Warsh to cut interest rates as soon as June 16-17, at the next Fed meeting.

But decisions about the federal funds rate are made by a committee. And the Fed chair is just one of 12 voting members of the Federal Open Market Committee.

Cutting interest rates is one thing he can't do right now or ever all by himself.

But there are three things Kevin Warsh can do to change the Fed over the length of his initial four-year term.

– David Dittman

Read more: 3 Ways Kevin Warsh Will Change the Fed

Rate cut? More like rate hike!

"Do I think he'll cut rates? No chance."

That's how legendary hedge fund manager Paul Tudor Jones assesses the probability that Kevin Warsh will do as President Donald Trump wishes and lower the target range for the federal funds rate as soon as he takes over at the most important central bank in the world.

The Senate is expected to approve Warsh's nomination to be the next Fed chair before May 15, when Jerome Powell is scheduled to leave the post.

That doesn't mean lower interest rates are coming, though.

"Well, I'd be thinking about raising them," Jones said on CNBC. "I'd want to see the data. But I mean, for sure you'd be thinking about it. And I think he's going to be constrained before the election."

The April jobs report, due out ahead of Friday's open, will provide more color about the employment situation, while the trajectory of inflation remains uncertain due to the war in the Middle East and the lingering impact of President Trump's tariffs.

Meanwhile, although the chair can't cut (or raise!) interest rates all by himself, there are things Warsh can do to change the Fed.

– David Dittman

April CPI rises at its fastest annual pace since 2023

A slowing labor market was the Federal Reserve's main focus in mid- to late 2025. Attention has shifted to inflation in 2026 as energy prices spike amid the ongoing conflict in the Middle East.

Since late February, when the war between the U.S., Israel and Iran began, oil prices have spiked to their highest level in four years and gas prices have jumped above $4.50 per gallon.

And it's already taking its toll on consumers' purchasing power. According to the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) rose 0.6% from March to April and was 3.8% higher year over year, the highest annual increase since May 2023. In March, CPI was 0.9% higher month over month and up 3.3% year over year.

Energy costs had the biggest impact on the April CPI report. "The index for energy rose 3.8 percent in April, accounting for over forty percent of the monthly all items increase," wrote the BLS. Compared to the year-ago period, the energy index was up 17.8% and the gasoline index was 28.4% higher.

Food costs were also higher in April, as were those for household furnishings, airfares, personal care and clothing. The shelter index was higher, too, rising 0.6% month over month after "the BLS introduced a methodological fix to an issue caused by the federal government shutdown in late 2025," says Matt Colyar of Moody's Analytics.

"If it weren't for an unusually mild reading in health care costs, the April results would have been worse," says Kiplinger's Payne. "There will be a similar rise in energy costs for May, though shelter will return to its normal increase."

Economists were calling for headline inflation to be up 0.6% from March to April and 3.7% from the year prior.

Core CPI, which excludes volatile food and energy costs, accelerated in April, rising 0.4% month over month and 2.8% year over year vs March's readings of 0.2% and 2.6%. Economists expected core CPI to be up 0.3% on a monthly basis and 2.7% higher year over year.

"For the Fed, with two successively strong employment reports, it should be increasingly turning its gaze away from labor being a problem (which in our view is more of a supply issue than a demand one) toward inflation as the problem," says Richard de Chazal, macro analyst at William Blair. "Inflation was already broadly accelerating before the closing of the Strait of Hormuz, and this recent supply shock just exacerbates that underlying trend. New Fed Chair Kevin Warsh will certainly have a harder time framing this case for rate cuts in this environment."

- Karee Venema

Senate confirms Warsh as Fed governor

By a vote of 51-45, the Senate on Tuesday confirmed Kevin Warsh to a 14-year term to the Federal Reserve's Board of Governors. Warsh will replace Stephen Miran, who temporarily filled a Fed governor position vacated by Adriana Kugler in August 2025.

The approval of Warsh to join the Federal Reserve's board is the final step before the Senate votes on his confirmation as the next Fed chair, which is expected to come as soon as Wednesday.

Jerome Powell's term as Fed chair is up this Friday, May 15, but he will stay on as a Fed governor for the time being.

- Karee Venema

The Senate confirms Kevin Warsh as the next Fed chair

By a vote of 54-45, the Senate on Wednesday confirmed Kevin Warsh as the next Fed chair, succeeding Jerome Powell, whose term is up on Friday.

"Warsh's approach to monetary policy is shaped by a more traditional view of what the Fed should and should not do," says Lawrence Gillum, chief fixed income strategist at LPL Financial. "Rather than leaning heavily on intervention and detailed promises about the future path of rates, Warsh has consistently argued for restraint, humility, and a greater reliance on incoming data."

And while President Trump is widely expecting the central bank to resume rate cuts, Warsh will take the reins at a time when the war in Iran is boosting energy prices and reigniting inflation. Additionally, "decisions about the federal funds rate are made by a committee," writes Kiplinger Investing Editor David Dittman. "And the Fed chair is just one of 12 voting members of the Federal Open Market Committee."

- Karee Venema

To help you understand what's going on in business and the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Although the Iran war clouds the horizon, the aerospace industry remains optimistic about 2026. Aircraft demand — civilian and defense — remains robust and could even see a significant boost because of the conflict. However, major risks abound.

On the civilian aircraft side of the business, Airbus and Boeing both have big ambitions that will run up against ongoing supply chain issues, technical difficulties and more. Airbus, for example, may struggle to meet its 870-jetliner delivery target amid problems with engine supplier Pratt & Whitney and long lead times for some materials, such as steel. Boeing’s output is still capped at 42 jets per month by the Federal Aviation Administration. While the company has experienced a major turnaround in recent years, ongoing problems with its flagship 737 Max aircraft could delay a long-awaited return to profitability.

The industry could surpass its 2019 peak in aircraft deliveries if both get their acts together. With its current 55% market share, Airbus is expected to maintain the lead. But Boeing has an opportunity to stage a comeback. Last year was the first since 2018 that Boeing received more new orders than Airbus. Analysts say a new single-aisle jet to replace the 737 Max could further narrow the gap with Boeing’s European rival.

Bad times spell even more business for manufacturers of military aircraft. Lockheed Martin’s F-35 remains the world’s top-selling fighter jet. Meanwhile, Boeing has given its defense business a boost by landing a next-generation fighter contract. The so-called F-47 is on track to fly in 2028, with 185 orders already on the books.

The current foreign policy landscape also contains some major red flags for American defense contractors, who have long led the industry. Many countries are developing alternatives to United States-made and -designed aircraft, the most notable of which is the Global Combat Air Programme, a joint effort by the United Kingdom, Italy, Japan and maybe Canada. Its next-generation fighter jet may one day rival Lockheed’s F-35, especially if the current tensions persist between Washington and its longtime allies.

The Iran war remains a major wild card. Commercial aircraft manufacturers aren’t concerned about the near-term effects of the conflict. Only 6% of the 1,350 jets that Boeing and Airbus expect to deliver this year are destined for the Gulf states, whose carriers would be among the first to alter their fleet plans. Over the long term, Middle Eastern buyers account for 10% of deliveries through the end of the decade.

The longer the conflict, the greater the fallout. Elevated jet fuel prices could crimp travel demand and prompt airlines to defer deliveries of new aircraft. Airlines won’t be quick to cancel orders, given years of pent-up demand. More likely, the war will cause them to retire older jets in favor of newer, more fuel-efficient ones.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• War in the Middle East Spells Higher Inflation for U.S. Consumers
• The Best Industrial Stocks to Buy
• The Best Aerospace and Defense ETFs to Buy
• Warfare Revolution: How the Military Uses AI

Inflation's always been top of mind for economists. But since June 2022, when the Consumer Price Index (CPI) hit its highest level in 40 years (9.1%!) and the Federal Reserve hiked interest rates to their highest level in over 20 years, it's become a major talking point for the rest of us.

This is because inflation is a measure of our purchasing power. How much things cost and how quickly prices are rising directly impact not only how far a dollar will stretch for us, but also how far it will go for the companies that we invest in. And very few things make the stock market grumpier than a disappointing profit margin.

More recently, the ongoing conflict between the U.S., Israel and Iran has caused oil prices to spike to their highest level in four years and gas prices to soar above $4.00 per gallon, putting a quick halt to the decelerating inflation trend we've seen in recent years.

"No matter how long the Iran war goes on, the economy is bound to suffer from it," write David Payne and Matthew Housiaux of The Kiplinger Letter. "How much and how severely depends on just how long the conflict continues to crimp key energy exports. Some degree of inflation is now inevitable."

And the March CPI report showed that inflation is indeed on the rise.

March CPI, by the numbers

According to the Bureau of Labor Statistics, headline CPI rose 0.9% from February to March, and was 3.3% higher year over year. This marked the highest annual increase since May 2024.

The results came in much higher than February's figures of 0.3% and 2.4%, and exceeded economists' estimates for a 0.8% monthly increase and a 3.1% annual rise.

Rising energy costs were the main reason behind the hot headline number. "The index for energy rose 10.9 percent in March, led by a 21.2-percent increase in the index for gasoline which accounted for nearly three quarters of the monthly all items increase," explained the BLS.

Shelter costs also increased in March, as did prices for airfare, apparel, household furnishings and new vehicles.

As for the good news, costs for medical care, personal care and used cars and trucks declined.

And core CPI, which excludes volatile food and energy prices, rose 0.2% from February to March, matching economists' expectations. Year over year, core inflation came in at a slower-than-expected 2.6%.

What is CPI?

"CPI is a measure of the average price of that basket of goods and services over time," writes Kiplinger contributor Coryanne Hicks. "The specific goods and services within the CPI basket are based on information around 24,000 families and individuals give the U.S. Bureau of Labor Statistics on what they buy."

Since inflation peaked nearly four years ago, the CPI and core CPI have declined. But the March data show that headline inflation is once again on the rise.

And Payne expects another large increase in gas prices in the April CPI, considering it measures mostly mid-month data. "That should shoot the 12-month inflation rate close to 4.0%, where it should stay until gasoline prices start falling," he explains in the Kiplinger inflation outlook.

And higher inflation, Payne says, will make the Federal Reserve reluctant to cut interest rates.

So what does Wall Street think about the March CPI report? Here, we look at some of what economists, strategists and other experts have to say about the results and what they could mean for the Fed and investors going forward.

What the experts are saying about the March CPI report

"The March inflation data reflected the anticipated impact of higher oil prices on the headline print, while the core print showed a mix of softening services prices and strengthening goods prices. The headline increase marked the fastest increase in four years and should serve as a warning to the markets, as higher oil prices flow through to the core components over the next few months. The Fed is likely to monitor incoming data before making its next policy adjustment, with the bar for renewed hikes significantly higher than that for resuming rate cuts." – Ryan Weldon, Investment Director and Portfolio Manager at IFM Investors

"This may be the best headline inflation number we see for a while as it may only partially capture the full force of the Iran conflict, which sent U.S. crude and U.S. gas up 70% at peak. Wage growth has decelerated to levels consistent with the inflation target, and long-term inflation expectations remain anchored. We believe the Fed will look through the energy-driven noise so long as these factors hold. The Fed has room to be patient, and every reason to do so. Today's number buys the Fed time, but the real test lies ahead." – Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management

"While the Iran conflict and closure of the Strait of Hormuz may come to a close in the near future, consumers will see price pressures on gas, energy, food and other commodities for at least the next three months, and that makes the Fed's job all the more tougher. The Fed keeps hitting detours on their path to cutting rates. Cuts are off the table for the foreseeable future. Hikes would only come if the economy is roaring on all cylinders and inflation is rising to untenable levels. The Fed has stated that it doesn't have the tools to fight supply side shocks and thus they will stick to their knitting monitoring employment and the stickier parts of inflation." – Skyler Weinand, Chief Investment Officer at Regan

"As we have been saying for the past month and a half, the duration of the war matters as does the extremely important Strait of Hormuz, because if the supply shock is temporary then the economy can weather this storm and the Fed will have an opportunity to lower interest rates by the end of the year, but if the inflation shock is more long-lasting they will have no choice but to sit on their hands for the entire year." – Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management

"Yes, we are seeing an oil-related spike in headline inflation, but core inflation remains tame. Unlike the previous spike in 2022, there is no broad-based inflationary trend in the U.S. economy and consumers do not have the cushion of pandemic savings to sustain their spending. The Fed will be loath to hike into this. If anything, the longer this conflict continues, the more aggressively the Fed will have to ease once oil prices peak out. The market understands this and you see it reflected in the performance of the Dollar and broader risk assets ever since 2-year Treasury yields peaked in late March." – Stephen Coltman, Head of Macro at 21shares

"Inflation, Iran, and upcoming earnings are all driving markets, but the relative importance keeps shifting. We think earnings and fundamentals win out. Inflation is a little hot, but reasonably stable. Iran may shift some consumption and investment patterns, but the potential demand destruction is probably not meaningful enough to matter as of now." – Scott Helfstein, Head of Investment Strategy at Global X

Related content

• An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your Retirement
• Recession-Proof Stocks: Best Stocks to Buy for a Recession
• How to De-Risk Your Portfolio in 5 Different Scenarios

To help you understand what's going on in politics and the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

No matter how long the Iran war goes on, the economy is bound to suffer from it. How much and how severely depends on just how long the conflict continues to crimp key energy exports. Some degree of inflation is now inevitable.

Energy prices won’t return to prewar levels, whenever peace returns. Too much damage has been done to the Persian Gulf’s infrastructure for pumping, refining and shipping oil and natural gas. Fuel prices will climb more if the war escalates, which is a real risk if Washington sends ground troops to secure parts of Iran’s coast or strategic islands.

Gasoline, averaging $4/gallon, could hit $5 or more this summer if the fighting mounts. Diesel, already nearing its all-time record of $5.82/gallon, could average $6, jacking up freight shipping costs. Fertilizer shortages will weigh on farmers around the world who didn’t secure what they needed before the war halted the Gulf’s huge fertilizer exports. That bodes especially ill for the spring planting season in the Northern Hemisphere. This means pricier food.

These and other cost pressures could boost headline inflation to 4% or more later this year, vs. 2.4% in February. That’s if oil prices, now at $110/barrel, stay near $100 per barrel for an extended period of time. While there will be plenty of price volatility, $100 on average is a real possibility if the war drags on. With the Persian Gulf blocked, at least 10% of the world’s oil, plus a huge amount of natural gas, can’t get to market.

Even a quick resolution of the fighting wouldn’t avoid an inflationary bump. Restoring exports of oil, gas, fertilizer and other key commodities from the Middle East will take anywhere from weeks to years, depending on the extent of needed repairs. In the U.S., gas prices might retreat to $3.50 — still above the $3 on the eve of the war.

Higher inflation makes any Federal Reserve interest rate cuts highly unlikely. The Fed has been cautious so far about what the war could mean for the economy. But it has signaled that it is on guard against renewed inflation pressures and will act to tamp them down if needed. It doesn’t want a repeat of 2022, when prices soared.

The economy can still keep growing, even in the face of higher inflation sparked by the war’s disruptions. Recall that in 2022, when inflation peaked at 9%, GDP still grew 2.5%. Outright recession is unlikely, though we can’t rule it out entirely. In fact, the economy stands to benefit from the extra defense spending that will occur, especially at ammunition factories. Inflation is not likely to hit the highs of 2022, given that the economy is not as tight and the labor market has more slack now. With a resolution to the war, or at least when oil tanker traffic can start to flow again, the price of oil will start to fall. Even if prices do not return to their prewar levels, any drop should grease the wheels of economic activity and restore investor confidence.

Other sectors that stand to be affected by the Iran war:

• Petrochemicals: Up to $25 billion in shipments pass through the Strait of Hormuz annually. Led by Saudi Arabia, the Middle East accounts for 40% of global polyethylene exports, the world’s most common plastic, the price of which has jumped 37% since late February.
• Cars: Overall sales will slip by 3.0% on higher interest rates. Purchases of fuel-efficient hybrids are sure to keep soaring. Electric car sales may rise a bit, too.
• Domestic oil and gas producers and refiners stand to reap sizable benefits as they partially fill the void in energy markets left by missing Middle East exports. The U.S. being the world’s largest oil and gas producer is an invaluable asset now.

Note the rising risk that the unpredictability of the war will dampen confidence among consumers and businesses this year. That could cause consumers to save more and businesses to cancel spending plans, especially if the fighting drags on or escalates.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Content

• How Rising Interest Rates Can Affect You
• What Will the Fed Do at Its Next Meeting
• Kiplinger Energy Outlook: Drivers Feel the Effects of War in Iran
• Gas Prices Are Rising Fastest in These States

The March Fed meeting concluded today, March 18, with the central bank's latest policy decision.

Following three straight quarter-point rate cuts to end 2025 and with Federal Reserve Chair Jerome Powell nearing the end of his term, the central bank kept the federal funds rate unchanged for a second straight meeting.

"The ongoing tension between the Fed's inflation and employment mandates has become harder to assess amid the conflict in Iran and the resulting rise in oil prices," says Lon Erickson, portfolio manager at Thornburg Investment Management. "The only material change to the statement was to acknowledge this increased difficulty."

This meeting also featured the quarterly release of the FOMC's Summary of Economic Projections, or "dot plot," which shows where the committee expects the federal funds rate and inflation to be at the end of 2026.

"The changes to the SEP compared to December were relatively minor," says Erickson, who adds that "the Fed appears comfortable with current economic conditions, higher oil prices, and geopolitical concerns notwithstanding. "

The Kiplinger team reported live on the March Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Scroll for the updates.

Big Change Coming to the Federal Reserve | How Does the Federal Reserve Work? | Quiz: How Well Do You Know the Fed?

Fed meeting schedule for 2026

The next Fed meeting, which runs from March 17 to March 18, marks the second gathering of 2026.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full remaining Fed meeting schedule for 2026:

March 17 to 18

April 28 to 29

June 16 to 17

July 28 to 29

September 15 to 16

October 27 to 28

December 8 to 9

Housing market could keep inflation anchored, say Manulife John Hancock co-chief investment strategists

Recent inflation data has been mixed. The February Consumer Price Index (CPI) report was lower on an annual basis compared to January – 2.4% vs 2.7% to start the year.

But the January Personal Consumption Expenditures (PCE) Price Index – the Fed's preferred measure of inflation – came in at its highest level since March 2024.

Part of this difference, say Emily Roland and Matt Miskin, co-chief investment strategists at Manulife John Hancock Investments, is that the CPI gives greater weight to shelter costs, which have been slowly trending down.

And while markets now consider the most recently reported CPI and PCE readings dated given that spiking energy costs – including higher gas prices – have raised inflation expectations and lowered rate-cut odds, the two believe shelter costs could provide some stability.

"While we are fully aware of the risk to inflation rising due to the oil price spike, we would not forget about shelter/housing as a key reason inflationary dynamics may be anchored to some degree," Roland and Miskin write in emailed commentary. "The 30-year fixed mortgage rate spiked last week from just over 6% to now nearly 6.5%. Higher mortgage rates, greater volatility in markets (hindering the growing wealth effect), and increased economic/policy uncertainty (likely to weigh on consumer confidence) could weigh further on the housing market as the year goes on."

This scenario, according to the strategists, "would suggest a more anchored inflation backdrop than the market’s knee-jerk reaction to higher oil prices we have seen recently."

- Karee Venema

Stocks are higher to start Fed week

Stocks are trading higher to start Fed week as bargain hunters swoop in following last week's third straight weekly loss for U.S. markets.

The blue-chip Dow Jones Industrial Average is up 1.1% at 47,045, the broader S&P 500 is 1.2% higher at 6,708, and the tech-heavy Nasdaq Composite has gained 1.3% to 22,390.

Mega-cap stocks are creating tailwinds for the broader market. Meta Platforms (META), for one, is 3% higher on unconfirmed reports that the Facebook parent is planning to lay off 20% of its workforce.

And chipmaker Nvidia (NVDA) is up 2.3% ahead of GTC, its annual artificial intelligence conference.

As for oil, West Texas Intermediate (WTI) crude futures are down 3.7% at $95.06 per barrel, but remain more than 40% higher month to date.

- Karee Venema

It's a big week for global central bank meetings

It's a big week for central bank meetings around the world. In addition to the Federal Reserve, the European Central Bank (ECB), Bank of Japan (BoJ) and Bank of England (BoE) will be meeting to issue their latest policy decisions.

According to Jim Reid, global head of Macro Research and Thematic Strategy at Deutsche Bank, this marks the first time the four central banks have held their gatherings in the same week since December 2021.

"All of them will have a very complex backdrop to deal with, shaped by geopolitical risk, volatile energy prices, and unsettled inflation dynamics," Reid says. "Clearly, the Middle East is the center of attention for markets right now."

It's widely expected that all four central banks will leave interest rates unchanged this time around, says Derren Nathan, head of equity research at Hargreaves Lansdown, but he expects the Fed and the Bank of England to resume rate cuts later this year.

Nathan doesn't expect rate cuts from the ECB until next year, while the BoJ will likely raise rates at some point down the road. "However, if the current spike in oil prices persists, we may need to revise these views as policymakers grapple with the conflicting inflationary pressure and brakes on economic growth that come with higher energy costs," he adds.

- Karee Venema

When does Jerome Powell's term as Fed chair end?

President Donald Trump has not been subtle in his dislike of Fed Chair Powell. But the question of whether or not Trump can fire Powell has quieted down in recent months, given that the Fed chair's term is up on May 15, 2026.

In January, President Trump nominated Kevin Warsh to replace Chair Powell once his term is up. "Warsh was Fed Chair Ben Bernanke's right-hand man during the 2008-09 global financial crisis and was his primary liaison to Wall Street, which earned him credibility he still retains," writes Kiplinger investing editor David Dittman. "Markets see Warsh as a source of stability should Trump continue to pressure the central bank. He served on the Federal Reserve Board from February 2006 through March 2011."

However, Warsh's path to Fed chair is not guaranteed at this point. Indeed, Republican Senator Thom Tillis from North Carolina, a member of the Senate Banking Committee, has vowed to block any Federal Reserve nomination until a Department of Justice probe into Powell is resolved.

"This is about this is bedrock principle of Fed independence," Tillis told reporters earlier this month, according to CNBC. "The reason why I came out so strong so early is I believe that we, I, have no earthly idea what the market reaction would have been if suddenly the perception is that the Fed chair serves at the pleasure of the President, right?"

Tillis also called the administration's efforts to fire Fed Governor Lisa Cook are "sophomoric." However, the senator said he is "already impressed" with Warsh.

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

The DOJ's probe into Chair Powell gets dealt a legal blow … for now

In January, the Department of Justice served the Federal Reserve with grand jury subpoenas regarding a multi-year renovation project at the central bank's headquarters in Washington, D.C., as part of a criminal investigation into Chair Powell.

Powell, in a historic move for a Fed chair, quickly responded to the allegations that he gave false statements to Congress regarding the renovations.

"This unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure," Powell said in a video statement. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

The investigation is seen as a threat to the Federal Reserve's independence and has received criticism from around Wall Street. JPMorgan Chase (JPM) CEO Jamie Dimon, for one, said that "anything that chips away at" the Fed's independence "is not a good idea."

Meanwhile, Senator Thom Tillis, a Republican from North Carolina and member of the Senate Banking Committee, has threatened to block any Federal Reserve nomination until this issue is resolved.

And on Friday, March 13, it appeared the DOJ was hit with a legal blow when James Boasberg, a federal judge in Washington, tossed out the two subpoenas served to the central bank.

"There is abundant evidence that the subpoenas' dominant (if not sole) purpose is to harass and pressure Powell either to yield to the president or to resign and make way for a Fed chair who will," Boasberg wrote in his 27-page decision. "On the other side of the scale, the government has offered no evidence whatsoever that Powell committed any crime other than displeasing the president."

However, this is not the end of the road for the investigation. Jeanine Pirro, U.S. attorney for the District of Columbia, said she will appeal the decision and file a motion asking Judge Boasberg to reconsider.

- Karee Venema

Who gets to vote at the March Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2026 FOMC voting committee consists of:

Fed Chair Jerome Powell*

Vice Chair Philip Jefferson

Fed Governor Michael Barr

Fed Governor Michelle Bowman

Fed Governor Lisa Cook

Fed Governor Stephen Miran**

Fed Governor Christopher Waller

New York Fed President John Williams

Cleveland Fed President Beth Hammack

Minneapolis Fed President Neel Kashkari

Dallas Fed President Lorie Logan

Philadelphia Fed President Anna Paulson

In 2027, the presidents from Chicago, Richmond, Atlanta and San Francisco will rotate in as FOMC voting members, according to the Federal Reserve.

* Jerome Powell's term as Fed chair is up in May 15, 2026

** Stephen Miran's term as Fed governor was up on January 31, 2026, but he will continue to serve in the role until a successor is approved

- Karee Venema

Oil prices, inflation expectations are likely to keep the Fed sidelined this week

Expectations for Wednesday's Federal Open Market Committee (FOMC) meeting are that the Fed will stand pat on interest rates.

The central bank is not going to want to make a move on short-term rates, either up or down, until they see what is going to happen with oil prices and the resulting impact on inflation expectations.

- David Payne

There are "no guarantees" oil prices will fall soon, says Trump's energy secretary

Oil prices have spiked to their highest level in four years as a result of the Iran war. Both West Texas Intermediate crude – the U.S. benchmark for oil prices – and Brent crude, the international benchmark, are up more than 40% for the month to date.

And according to AAA, the average price for a gallon of gas in the U.S. is 27% higher than it was a month ago. Rising gas prices are having a direct impact on consumer sentiment, too, as seen in the University of Michigan's preliminary Consumer Sentiment Index for March, which was released last Friday.

The index was down 1.9% vs February, with gasoline prices having "the most immediate impact felt by consumers," says Surveys of Consumers Director Joanne Hsu.

Hsu notes that the survey, which was conducted between February 17 and March 9, also showed that "a broad swath of consumers across incomes, age, and political affiliation all reported declines in expectations for their personal finances, down 7.5% nationally."

And gas prices could stay elevated for the time being. Speaking on ABC's "This Week" on Sunday, Energy Secretary Chris Wright said there are "no guarantees" that oil prices will come down in the near term.

"Right now, our focus is destroying their military capabilities, including those that are used specifically to threaten the straits," Wright noted. "But we need to finish those tasks first, and you will see the straits open again in the not-too-distant future."

He added that the administration is aware the conflict "would cause a little bit of increased prices on Americans," but said, "this is short-term pain to get through to a much better place."

- Karee Venema

Related: War in Iran Threatens Higher Fuel Prices, Renewed Inflation

Where have all the Fed speakers been?

The Fed-speak has been nonexistent over the past week or so. That's by design. Since Saturday, March 7, and until Thursday, March 19, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent to which they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s. It was formalized in 2011 and reaffirmed in January 2025.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2028.

- David Dittman

The Fed's near-term inflation forecast is likely to change given higher oil prices, says Johnson Investment Counsel's chief economist

Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel, says that it's widely expected the FOMC leaves the federal funds rate at its current range of 3.5% to 3.75% when it concludes its March gathering this Wednesday afternoon, though he believes the Fed "is likely to acknowledge uncertainty related to the war with Iran."

Zureick notes that crude oil is up by more than 50% since the January Fed meeting. "This is likely to raise the Fed's forecast for inflation in the near term, while also weighing on the outlook for economic growth," he says. Investors will see how the Fed's forecast has evolved, given the ongoing conflict in Iran, in the Summary of Economic Projections (SEP).

He adds that as part of the SEP, the Fed will also release its forecast for interest rates, known as the "dot plot."

"While it is possible that a few FOMC members could adjust their interest rate forecasts to include less potential policy easing, considering higher energy prices, the overall rate forecast from the Fed is unlikely to change materially," says the economist.

Zureick also believes that with Powell's term nearing its end, the Fed chair is "unlikely to comment directly about the upcoming leadership change," leaving investors "to consider how policy may evolve under Kevin Warsh – the President's nominee."

- Karee Venema

Stocks close Monday with big gains, oil prices retreat

Stocks opened the week much higher as bargain hunters swooped in following three straight weekly losses. Oil prices were also on the move, only the price action was to the downside, as President Donald Trump called on U.S. allies to help escort ships through the Strait of Hormuz.

While no nation has publicly committed to assist the U.S., according to The Wall Street Journal, front-month West Texas Intermediate (WTI) crude futures fell 5.3% today to settle at $95.50 per barrel.

As for the main indexes, the blue-chip Dow Jones Industrial Average was up 0.8% at 46,946, the broader S&P 500 was 1.0% higher at 6,699, and the tech-heavy Nasdaq Composite had gained 1.2% to 22,374.

Read more: Stocks Open Higher to Start Fed Week: Stock Market Today

Futures turn positive as Fed meeting begins

Equity index futures recovered from an early decline on Tuesday and pointed to a positive open for U.S. stocks on the first day of the second Federal Open Market Committee (FOMC) meeting of 2026.

The front-month West Texas Intermediate crude oil futures contract is trading 2.7% higher after Israel said it killed Iran's top security official and the Islamic Republic struck a natural gas field in the United Arab Emirates.

Treasury yields inched lower, with the 2-year down to 3.665% vs 3.68% on Monday, the 10-year at 4.206% vs 4.22% and the 30-year down to 4.855% from 4.858%.

Investors, traders and speculators as well as monetary policymakers are closely tuned to what's happening in the Middle East and the flow of traffic through the Strait of Hormuz.

"The Hormuz closure is turning a shipping disruption into a true global supply loss as storage in the region fills and upstream shut-ins rise," Morgan Stanley Global Director of Research Katy Huberty writes.

Though offsets to lost supply can only replace "a fraction of the barrels lost" via the strait, according to Huberty "the bar remains high for the oil spike to threaten the business/earnings cycle."

The Fed's approach during similar events in the past was to look through short-term spikes in crude oil prices due to geopolitical events while continuing to balance inflation and economic growth risks.

"The central bank is widely expected to remain on the sidelines," BMO Senior Economist Priscilla Thiagamoorthy writes, "with markets focused less on the actual decision itself, and more on signals around inflation, oil price shocks and the path of future monetary policy."

– David Dittman

The Fed is likely to be less intense about crude oil

All three main U.S. equity indexes held solid gains about an hour into the trading session on the first day of a Fed meeting made more complicated by a war in the Middle East.

Markets and monetary policymakers must weigh the impact of higher oil prices. Indeed, is it a good time to chase energy stocks as oil prices spike?

Well, that depends. In addition to your risk tolerance, time horizon and objectives, you'll want to think about how high crude oil prices will go from here and how long they will stay there. (Just like the Fed, in fact…)

While oil is still a critical factor in our economy, we just aren't as intense about it. "Lower oil 'intensity' – less oil used per dollar of economic output – means energy shocks have a smaller impact on growth than in past decades," LPL Financial Chief Economist Jeffrey Roach explains.

And on the supply side, the U.S. is now a net exporter of products made from crude oil. "Because we produce more than we import," Roach elaborates, "the economy is less affected by volatile oil prices than during the 1970s and '80s, for example."

At the same time, Roach writes, "Despite less reliance on oil, higher oil prices will add pressure to inflation. If energy costs stay elevated, inflation could rise again, potentially delaying interest rate cuts from the Federal Reserve."

Bottom line: "Geopolitical uncertainty remains a risk," the economist concludes. "Conflicts in the Middle East could disrupt supply chains and increase price volatility in key commodities like oil."

– David Dittman

A survey of former Fed officials says…

The war in the Middle East will contribute to higher inflation and more unemployment this year, a regular survey of former Federal Reserve officials (pdf) says, and there’s little the U.S. central bank can do about it

Former officials forecast 3% inflation vs the Fed's 2.4% projection, current as of December. The Fed's long-term inflation target is 2%. The former officials estimate unemployment at 4.6% vs. a Fed estimate of 4.4% and a long-term "normal" rate of 4.2%.

Though they agree the U.S. is not currently in recession or heading toward such a slowdown, they do project slower economic growth. And that could change based on the conflict in the Persian Gulf and the extent of disruptions to global crude oil flows.

Jon Hilsenrath, the original "Fed whisperer" at The Wall Street Journal who is now a visiting scholar at Duke, asked 28 former officials and staff members about the substance of the Fed's Summary of Economic Projections (SEP) between March 6 and March 13.

Hilsenrath conducts his survey on a quarterly basis coincident with the release of the SEP. His panel includes former Fed governors, regional bank presidents and researchers.

– David Dittman

The Fed chair and the price of oil

Pretty soon we'll be talking about Fed Chair Jerome Powell's last FOMC meeting and press conference. That's on the economic calendar for April 28-29. Assuming he's confirmed, soon we'll be talking about Kevin Warsh's first FOMC meeting as the new Fed chair, scheduled for June 16-17.

CME FedWatch still suggests a Warsh Fed will be more likely to cut interest rates than the Powell Fed is, but the probabilities are shifting in favor of meetings further out on the calendar, along with potential upward pressure on inflation from spiking crude oil prices.

Indeed, futures pricing shows an 80.8% probability the federal funds rate remains in a target range of 3.50% to 3.75% come June 17, up from 78.0% on Monday, 58.3% a week ago and 36.6% a month ago.

Note that the price of the front-month West Texas Intermediate crude oil futures contract was up 50.0% from the close on February 17 through the close on March 16.

Morgan Stanley Chief U.S. Economist Michael Gapen still expects the Fed to cut as soon as Powell departs. "We're still on June and September," Gapen told Bloomberg, "with the risk of course it gets delayed." Gapen added that "the later and maybe the longer the Fed waits, the more it has to put in maybe an additional rate cut."

The economist said that "a reasonable recession probability" doesn't arise until crude oil prices get to $125 to $150 for a prolonged period. "The economy can handle $90 to $100 per barrel prices," he concluded.

– David Dittman

What if the Fed's next move is a rate hike?

We just talked about an out-of-consensus view on the Federal Open Market Committee (FOMC) and when it will cut interest rates.

According to CME FedWatch, the market is almost 100% sure the Fed's next move will be to lower the federal funds rate, whether in June or later in 2026.

Of course, "almost" is doing the work here, and High Frequency Economics Chief Economist Carl Weinberg made at least one headline with his call for this week's Fed meeting.

As MarketWatch reports, Weinberg last week wrote in a note to clients that "the Fed's job is to minimize the risk of the worst-possible outcome," which he says is prices accelerating above the central bank's 2% inflation target.

“Even if the FOMC does not hike," and Weinberg refuses to rule out such a move this week, "officials will surely talk about it, and we expect Mr. Powell will let us know about it at his press conference."

– David Dittman

When the FOMC meeting is "the other big news"

"The big news this week," Louis Navellier of Navellier & Associates observes, "will be Nvidia’s (NVDA) developers’ conference." The tech stock, which is down more than 6% since management reported earnings last month, "looks very strong and is a great oasis stock for nervous investors."

NVDA has added more than 1% this week. As Navellier notes, leader of the AI revolution "is already helping to boost storage companies," including Micron Technology (MU) and Seagate Technology (STX) as well as AI hardware stocks "that speed up optical connections," such as Ciena (CIEN) and Ubiquiti (UI).

"The other big news," Navellier writes, "will be the Federal Open Market Committee (FOMC) meeting and the FOMC statement." Navellier expects the Fed to say it's "carefully monitoring" the employment situation, as the February jobs report marked the fifth month of losses in the past nine.

"Additionally," he says, "I hope the FOMC will stay that they expect that food and energy inflation will be 'transitory' due to the bombing in Iran that disrupted the traffic in the Strait of Hormuz."

The three main U.S. equity indexes were holding modest gains heading into the last hour of trading on the first day of the March Fed meeting, with nine of 11 sectors in positive territory.

The front-month West Texas Intermediate crude oil futures contract was up 3.3% but has retreated from recent highs above $100.

"Now that the U.S. bombed the Kharg Island with Iran’s deepwater access for supertankers, the U.S. is now effectively in control of Iran’s crude oil revenue," Navellier concludes. "It is likely that Iran and the U.S. will be negotiating soon, so that is providing some temporary crude oil price relief."

– David Dittman

Why present is prologue for the fed funds rate

The Federal Open Market Committee (FOMC) meets eight times a year to talk about interest rates, inflation and employment. The FOMC releases its Summary of Economic Projections (SEP) – the "dot plot" you'll hear so much about tomorrow – four times a year, in March, June, September and December.

Indeed, the updated SEP will be "a key point" on Wednesday, as Deutsche Bank strategist Matthew Raskin writes. "Our economists expect the median headline and core PCE inflation projections for this year to move up to 2.7% and 2.6%, respectively, with all other median economic projections unchanged."

Deutsche Bank economists expect "no revisions to the median calendar year fed funds rate projections but anticipate the median longer-run dot will inch up a tenth to 3.1%." And here's the thing about that…

Raskin describes a set of U.S. Treasury market term structure-based models that offer clues when and where the "neutral rate might be expected to move materially in the future (as may be the case today given the potential effects of AI)."

Those models indicated a "substantial markdown in SEP projections" during the 2010s, suggesting their probative value. "The range of term structure-based estimates currently spans 3.0-3.8% with a median of 3.7%, firmly above the SEP median even if it moves up as we expect," Raskin observes.

"That is, through the lens of these models," the strategist concludes, "the curve embeds expectations that the Fed’s policy rate will ultimately settle around its current level."

– David Dittman

Higher oil prices can't keep stocks down

Stocks opened comfortably higher Tuesday, but lost steam as the session wore on as market participants weighed the latest developments in the Middle East. Rising oil prices were also in focus as the Federal Reserve kicked off its March meeting.

At the close, the blue-chip Dow Jones Industrial Average was 0.1% higher at 46,993, the broader S&P 500 was up 0.3% at 6,716, and the tech-heavy Nasdaq Composite had gained 0.5% to 22,479.

Front-month West Texas Intermediate (WTI) crude futures rose 2.9% to settle at $96.21 per barrel, and are now up nearly 44% for the month to date.

While the central bank is widely expected to keep rates unchanged, Wall Street will be watching to see how higher energy costs will impact the Fed's inflation forecast and rate-cut plans.

Read more: Higher Oil Prices Can't Keep Stocks Down: Stock Market Today

We've got three weeks until the real energy shock

It's fair to assume the central bank has people on staff doing this kind of work too, but let's turn it over to BMO Senior Economist Erik Johnson for an estimate of when crude oil's rise might begin to have a real impact on things the Fed pays attention to such as inflation.

The problem is approximately 20 million barrels of crude oil moves through the Strait of Hormuz during normal times. These are not normal times.

As Johnson explains, tanker crossings have plunged from 50 to 80 per week in each direction to nearly zero in the third week of a disruption that's likely removed approximately 180 million to 250 million barrels from global supply.

"A coordinated 400-million-barrel IEA-led SPR release will help cushion the shortfall over the coming month," Johnson estimates. Based on his assumptions for output from the Persian Gulf, the coordinated effort can replace approximately 16 to 22 days of normal flow through the Strait to global markets.

"That implies the U.S. and Israel have roughly three weeks to reach an offramp before upward pressure on oil prices intensifies further," Johnson concludes.

Meanwhile, as the economist also explains, "Fuel oil is a core input for maritime freight, and food commodities remain among the most shipping-intensive goods in world trade."

Global food prices were trending lower before the war in the Middle East. "Since 2008," Johnson writes, "year-over-year changes in Singapore fuel-oil prices and the FAO Food Price Index have exhibited a strong positive correlation."

So another risk to mind here is "that prolonged fuel-price pressure could trigger a renewed acceleration in global food inflation."

That would be hard on emerging markets, which generally import a lot of fuel and food. It would also be hard on central banks, including the Fed, which "could face widening headline–core inflation gaps, complicating monetary policy decisions," as Johnson notes.

And, of course, it would also be hard on people: "Food inflation is one of the most salient categories for households," the economist concludes.

– David Dittman

Stock futures point lower after hot PPI data

The main indexes are poised for a lower open on Wednesday after a hotter-than-expected Producer Price Index (PPI) report.

According to the Bureau of Labor Statistics, PPI, which measures wholesale prices, rose 0.7% month over month in February, faster than December's 0.4% increase and January's 0.5% rise. Economists expected PPI to be up 0.3%

Year over year, PPI was up 3.4%, its largest annual increase since February 2025.

"Both services as well as goods prices were very strong, underscoring the risks for monetary policy," write Eugenio J. Alemán, Ph.D., chief economist, and Giampiero Fuentes, economist at Raymond James. "This report likely reinforces a hold decision by the Federal Reserve later today but tilts the risk toward a more hawkish tone in today's FOMC decision."

At last check, futures on the Dow Jones Industrial Average, the S&P 500 and the Nasdaq-100 were all down 0.6%.

- Karee Venema

How can investors prepare for market volatility?

The stock market has made some major one-day moves in recent weeks. Just today, futures were signaling a higher open until a red-hot inflation report quickly sent them tumbling into the red.

And the escalating conflict in Iran, which has boosted energy prices and ramped up inflation concerns, certainly doesn't ease investors' worries.

"We find ourselves in an interesting place with the potential for continued volatility given the myriad of economic and geopolitical risks that hang over markets," says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.

But Schutte says it's important for investors to remember that "the proper response is not one of dramatic action or large shifts in portfolio construction but rather a continued steady hand. After all, your portfolio asset allocation already reflects the reality that these various outcomes have been and unfortunately will be future features of both economies and equity markets."

He adds that this is "what diversification is built for," including different assets in your portfolio that do well in different scenarios. Because "uncertainty spikes are just that — a historical and likely future reality."

There's no one way to build your portfolio to guard against uncertainty. It's really up to you and your financial goals. But including high-quality core stocks that provide stability to your portfolio is a good place to start, while the addition of low-cost index funds is another way to navigate the ups and downs of the market.

- Karee Venema

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time today, March 18.

"Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated," the committee wrote in its January statement. "Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate."

As such, the FOMC voted to keep the federal funds rate at its current range of 3.50% to 3.75%.

Wells Fargo economists Tom Porcelli, Sarah House and Michael Pugliese don't anticipate any dramatic changes to the March FOMC statement.

"We expect it to highlight additional uncertainty in the outlook due to the Iran conflict," the group notes. And following a much weaker-than-anticipated February jobs report, the economists say they "would not be surprised if the language around 'some signs of stabilization' in unemployment is tweaked to be a bit more pessimistic."

- Karee Venema

What time does Jerome Powell speak today?

Fed Chair Powell will host a press conference at 2:30 pm Eastern Standard Time today, March 18.

Deutsche Bank economists believe Chair Powell will underscore "that significant uncertainty remains," and explain "how recent events could impact the economy and monetary policy."

The economists expect Powell to note that monetary policy is in a solid position to withstand any consequences of these risks and that the Federal Reserve is monitoring these events closely.

"Fundamentally, the latest oil price spike represents another adverse supply shock that would, at the margin, create further tensions between the Fed’s dual mandates, all else equal," they write. "While markets have interpreted these developments as leaning hawkish for the Fed – an interpretation we agree with directionally – Powell is unlikely to give a strong signal about how near-term policy has been affected, if at all."

As for any questions regarding rate hikes, the economists believe Chair Powell will "likely point to the SEP and reiterate the value of such diverse views on the Committee."

- Karee Venema

A "tricky trifecta" will keep the Fed sidelined today, says HB Wealth's chief market strategist

The Federal Reserve is likely to remain sidelined at its March meeting "as markets focus near term on the tricky trifecta of war, AI and private credit," says Gina Martin Adams, chief market strategist at HB Wealth. In addition, Powell is a "lame duck" as he nears the end of his term as Fed chair.

"Given we've only seen inflation pressures escalate in the short run, and that the general consensus view is the war will end in short order, it is hard to make a case that the Fed should be doing anything but sitting tight at this time," she adds.

Martin Adams notes that oil prices remain the "clear short-term driver" of price action. And she believes some similarities can be drawn to the 2022 oil supply shock, including that "continued supply chain constraints threaten to elevate BOTH food and energy prices."

The strategist explains that stocks initially shrugged off the spike in oil prices in 2022, assuming the Russia-Ukraine war would be short-lived. "In the first two weeks of the Russia-Ukraine war, the S&P 500 dropped just 0.6%," Martin Adds says. "That year, it took two months of elevated commodity prices to dismantle the equity market's sanguine view, and five months of elevated oil prices to create a recession in earnings."

In the bigger picture, she feels a swift end to the war in Iran and a settling of oil prices will refocus the market's attention on AI and private credit, which were both "struggling well before the war broke out."

- Karee Venema

Powell & his purple ties

It's a near-certainty that the FOMC will keep rates unchanged today. It's also likely that Fed Chair Powell will wear a purple tie during Wednesday's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

Dow Jones dives 440 points ahead of Fed's interest rate decision

With a little under 45 minutes to go until the Fed's interest rate decision, stocks are trading in negative territory.

At last check, the blue-chip Dow Jones Industrial Average was down 0.9% at 46,551, the broader S&P 500 was off 0.8% at 6,665, and the tech-heavy Nasdaq Composite was 0.9% lower at 22,285.

Markets are reacting to this morning's hotter-than-expected Producer Price Index (PPI) data for February and another spike in oil prices. Front-month West Texas Intermediate (WTI) crude futures are up 2% to trade at $98.12 per barrel.

Over in the bond market, the yield on the 2-year Treasury is up 4.9 basis points at 3.72%, while the 10-year Treasury yield is 3.2 basis points higher at 4.234%. (A basis point = 0.01%.)

- Karee Venema

The Fed decision on interest rates is in

The Federal Reserve paused once again in March, keeping the federal funds rate at its current range of 3.5% to 3.75%, as expected.

What changed in the FOMC's latest policy statement

Changes to the FOMC's latest policy statement include the following:

Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated. (Previously read: Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.)

Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate. (Previously read: Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.)

- Karee Venema

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

What did the FOMC's Summary of Economic Projections show?

Federal Open Market Committee members left their forecast for near-term interest rates unchanged from December, calling for just one quarter-point rate cut in 2026 and another in 2027.

However, their longer-run outlook for the federal funds rate rose to 3.1% from 3.0% in December.

The committee expects real gross domestic product (GDP) to be slightly higher than previously forecast, at 2.4% in 2026, 2.3% in 2027 and 2.1% in 2028. Projections for the unemployment rate were relatively unchanged, though the FOMC expects it to be at 4.3% in 2028, a tick higher than its prior outlook of 4.2%.

The Fed's inflation outlook for 2026 was higher, rising to 2.7% vs December's 2.5% projection.

You can see the FOMC's full Summary of Economic Projections here.

- Karee Venema

The Fed's "wait-and-see" approach is appropriate, says WFII co-head of Global Fixed Income Strategy

"Coming into 2026, we expected two Fed rate cuts," says Luis Alvarado, co-head of Global Fixed Income Strategy at Wells Fargo Investment Institute. "However, the balance of risks has shifted, and the bar for cutting rates has risen meaningfully."

As such, he believes the central bank's currently "wait-and-see" approach is appropriate.

Alvarado feels like the current backdrop is sort of a déjà vu for the Fed. "Policymakers are once again navigating competing objectives of bringing inflation down while avoiding unnecessary stress on growth and labor markets. That tension is likely to define monetary policy discussions throughout 2026."

And despite composition changes coming to the committee in Q2, Alvarado does not anticipate a major shift in policy direction. "The dot plot continues to show a wide range of views, underscoring uncertainty rather than a decisive pivot."

- Karee Venema

Powell talks about how the Fed is looking at rising energy prices

Asked how the Fed will react to the ongoing rise in energy prices due to the war in Iran, Powell said that the most important thing the central bank is looking for is whether inflation in goods caused by tariffs on imports is easing.

But he also acknowledged that inflation has been above the Fed's target for the past five years, which will complicate how, or whether, he and his colleagues will be able to discount the impact of rising oil prices on inflation.

Normally, the Fed "looks through" such shocks, but it sounds like it won't necessarily do that this time.

- Jim Patterson

Powell: Nobody knows how oil prices will impact the broader economy

"We haven't seen the progress we'd hoped for" on inflation in goods prices easing, due in part to the White House's tariff policies, Powell said.

Asked whether he is also concerned that the economy could suffer as consumers spend more on gas and less on everything else, Powell said that "nobody knows" at this point. "We just don't know" yet how significant the impact of the spike in oil prices could be for the broad economy.

He noted that it could weigh on consumer spending and consumer sentiment. But he also allowed for the possibility that the effect won't be that significant.

- Jim Patterson

Is there an upside to higher oil prices?

Is there an upside to higher oil prices, since the U.S. is the world's largest oil producer?

Powell seemed cautious about predicting one, noting that energy companies are going to want to see oil prices elevated for an extended period of time before they decide to drill and produce more oil.

"But some of that could happen over time" if the rise in oil prices proves durable.

- Jim Patterson

Powell believes inflation in goods prices is a one-time issue due to tariffs vs a systemic risk

"We worry a lot" about whether higher oil prices could cause consumers to begin expecting inflation to rise in the long run, which could become a self-fulfilling prophecy if people start buying more things in anticipation of higher prices later.

But Powell also noted that he thinks interest rates are currently high enough to keep pushing inflation down in the long run, even with the near-term price pressures from tariffs and rising fuel prices.

He regards the inflation in goods prices as largely the result of tariffs, which should act as a one-time boost to prices, as opposed to a systemic problem.

- Jim Patterson

Is Powell more concerned about the labor market or inflation?

What about the lackluster jobs market, where hiring has been slack recently?

Asked if he is more concerned about slowing job creation than inflation, Powell said no, noting that inflation is "well above" where the Fed wants it to be, "and that's a concern; we need to get back down to 2% ... I'd be hard-pressed to say that" unemployment or inflation is the bigger worry. Both are equal concerns.

- Jim Patterson

Powell will temporarily stay on as Fed chair if Warsh is not confirmed by the end of his term

When asked if he will stay on as Fed chair if nominee Kevin Warsh is not yet confirmed by the end of his term in May, Powell said he would on an interim basis, as dictated by law.

However, Powell said he has not yet decided if he will stay on the Fed's Board of Governors beyond the end of his run as Fed chair. His term on the board ends on January 31, 2028.

- David Payne

Despite weak jobs numbers in February, Powell says there are signs of stability in the labor market

Asked whether the February jobs report, which showed a loss of jobs, was a concern for the broader economy, Powell said that it should be combined with the better-than-expected job creation number in January.

"There are a number of indicators that suggest a degree of stability" in the labor market, but the Fed is still concerned about the trend of low job creation in recent months, with "effectively zero net job creation in the private sector."

However, he also noted that there is little or no growth in the labor force, due in part to restrictive immigration policies. So maybe the economy is balanced, with little demand for new workers, and little supply of them.

- Jim Patterson

Financial markets brace for no rate cuts this year

As Powell spoke, and noted that the Fed does not have high confidence in its projection for a single rate cut sometime this year, financial markets adjusted down the odds of seeing an interest rate cut.

Coming into the meeting, the consensus was a slight preference for one cut, but now markets are leaning toward the Fed standing still on rates this year. Perhaps that is due to Powell emphasizing that inflation is as big a concern for the Fed as weak job creation.

- David Payne

How worried should we be about higher gas and food prices?

Asked pointedly if American consumers should be worried about an extended period of high gas prices and a rise in food prices due to reduced fertilizer exports from the Middle East, Powell declined to make a forecast, emphasizing that the situation with the war in Iran is simply too volatile for the Fed to make any projections right now.

- Jim Patterson

The economy is holding up well, says Powell

"The U.S. economy has really been doing pretty well through a lot of significant challenges over the past few years," Powell said, when asked how much the Fed thinks it can predict about the impact of the Iran war.

He noted that a lot of economists expected a recession in 2022 when soaring inflation forced the Fed to jack up interest rates, yet the economy ended up doing well. Something similar could happen now, even if the war drives up certain costs and adds to inflation.

The economy has been resilient, was his message. But he also conceded that the Fed just doesn't know if it will shrug off this latest inflationary shock.

- David Payne

Is sticky inflation starting to weigh on consumer psychology? Powell thinks so

After five years of above-target inflation, what does Powell think the impact on consumer psychology has been?

"If you talk to people, they do feel squeezed." Some costs, such as insurance, are still rising at especially steep rates, he noted.

Those pressures just make the Fed even more determined to succeed at its legally mandated task of achieving price stability over the long term, Powell said.

He also mentioned that keeping the Fed independent of political pressures is critical to achieving that goal, which implies not cutting interest rates too much or too fast if prices are rising too fast.

- Jim Patterson

Dot plot signals "greater cohesion" among Fed members, says Mission Wealth CIO

"As expected, the Fed held rates steady at its March FOMC meeting," says Kieran Osborne, partner and chief investment officer at Mission Wealth. "The statement highlighted an uncertain economic backdrop, driven primarily by the Middle East conflict and the associated spike in oil prices."

Osborne points to the "dot plot," which was little changed vs December, showing "modestly increasing expectations for near-term economic growth and indicated slightly higher inflation projections — likely reflecting elevated oil prices."

Most importantly, Osborne says, "there was no change to the broader trajectory of monetary policy."

Osborne points to the fact that there was just one dissenter this time — Stephen Miran — which suggests "greater cohesion among voting members on monetary policy. Ahead of the meeting, expectations were for two to three dovish dissents. Both Miran and Waller dissented in favor of a 25 bp rate cut at the January meeting, and there had been some expectation that Bowman might join them this time around."

- Karee Venema

Powell says productivity is the reason behind the upwardly revised GDP forecasts

When asked whether the upwardly revised growth estimates in the Summary of Economic Projections are due to AI productivity, Powell said it was "just productivity."

He noted that they first saw productivity start to improve during the pandemic, even before generative AI. This is unusual for productivity to grow this strongly over such a long period of time. It's key to improving living standards.

Building data centers everywhere stimulates the economy, so rates could rise in the short term. But in the long term, the pressure on rates will be determined by which is stronger - the demand or supply side.

- David Payne

There's little sense of urgency for the Fed to move on interest rates, says Vaster's managing director

"The Fed’s decision to hold rates steady reinforces a cautious stance toward inflation, with the updated Summary of Economic Projections signaling that inflation may remain more persistent than previously expected," says Zack Simkins, managing director at Vaster.

The lingering uncertainty over rising energy prices and the conflict in the Middle East creates "little urgency for the Fed to make any abrupt moves," he adds.

Simkins adds that the FOMC's outlook signals "a continuation of the current rate environment, with any potential easing likely to be gradual."

Higher-for-longer interest rates could dampen some risk appetite, says Simkins, but they also provide "greater clarity for capital allocation decisions across asset classes. That added predictability is helping reduce volatility and gradually bring liquidity back into the market, particularly across more rate-sensitive sectors."

- Karee Venema

Stocks close lower after March Fed meeting

Stocks sold off Wednesday after the Federal Reserve did as expected and held its benchmark overnight lending rate steady, but signaled a growing concern with inflationary pressures.

The main U.S. equity indexes opened lower on hotter-than-expected wholesale price data, and crude oil's continuing rise helped keep a lid on risk appetite. The conclusion of the Fed meeting weighed on most sectors and industries late in the trading session.

At the closing bell, the blue-chip Dow Jones Industrial Average was down 1.6% at 46,224, the broad-based S&P 500 was off 1.4% at 6,624, and the tech-heavy Nasdaq Composite had lost 1.5% to 22,152.

Read more: Dow Slides 768 Points on Inflation Fears: Stock Market Today

Wednesday's post-Fed sell-off signals overly optimistic expectations, says Johnson Investment Counsel's chief economist

The FOMC's decision to stand pat on rates was expected, says Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel. And "while the Fed's assessment of the economy was little changed, they did acknowledge that 'The implications of developments in the Middle East for the U.S. economy are uncertain.'"

The Summary of Economic Projections signaled slightly higher forecasts for both economic growth and inflation, while the median forecast called for one additional cut in both 2026 and 2027, unchanged from the December forecast, he adds.

Zureick says that this makes clear the Federal Reserve is adopting a "wait-and-see" approach, "acknowledging that recent geopolitical developments are risks to both inflation and economic growth, but it is too early to take any policy action as a result."

While the FOMC's statement and SEP forecasts were fairly uneventful, the economist feels Chair Powell's press conference shed light on how he's approaching the uncertainty. "Specifically, he pushed back on the idea of near-term rate cuts and sounded a bit more hawkish regarding the outlook for inflation."

The subsequent stock sell-off is "a sign that perhaps investors were overly optimistic about the timing of additional policy easing," Zureick explains.

- Karee Venema

To help you understand what's going on in politics and the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Iran is down but not out. What lies ahead for the military situation and its economic impacts?

A clear-cut victory may prove elusive. American forces have performed effectively and demonstrated the superiority of U.S. weaponry. But Iran’s regime remains in place, shows no signs of collapsing, and vows to keep fighting. Its defeat may require a ground invasion, a daunting scenario that President Trump appears unwilling to order.

Tehran is waging an economic conflict since it can’t defeat the U.S. on the battlefield. The target: The region’s energy industry, a vital component of the global economy. Exports of oil and gas from the Persian Gulf are on hold, forcing some countries in the region to curb output. Tankers, refineries and other key energy facilities have been damaged by Iranian strikes. The longer this situation goes on, the harder it will become to restart energy exports whenever peace returns.

Energy prices have already jumped. Barring a ceasefire, they will keep rising. Iran is betting that Trump will have to back off as voters sour on rising gas prices. He is betting the battered regime will fold first. As of now, the most likely scenario seems to be an incomplete U.S. victory, in which Iran is left badly weakened, but defiant and intent on rearming for later.

The most serious economic risk of the war for the U.S. if the conflict drags on, is renewed inflation due to high energy prices. The economy is likely strong enough to stay out of recession, even though higher gas prices would probably crimp spending by many consumers. But if high fuel prices last longer and filter through the economy more broadly, inflation could prove painful and force the Federal Reserve to nix plans to trim interest rates. That would weigh on housing and other credit-sensitive sectors. In that scenario, Trump would come under mounting political pressure to declare peace.

An industry particularly exposed to the ongoing Middle East chaos is farming. About half of urea fertilizer ships through the Strait of Hormuz, which Iran has effectively closed to maritime traffic, as does a fifth of global shipments of liquefied natural gas — vital to production as both a feedstock and an energy source.

Prices are on the rise. Fertilizer prices have already increased by nearly 8%. Aluminum, another major Middle East commodity, has seen prices rise 32%. The effects of higher energy prices on Europe would be even more significant. Roughly 20% of the European Union’s crude oil and natural gas imports is sourced from the Middle East. The EU’s vulnerability is heightened by depleted gas storage following a cold winter. As with the energy price shock in 2022, a persistent rise in fuel prices now could spark another round of high inflation and a hit to GDP growth.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Content

• How Rising Interest Rates Can Affect You
• What Will the Fed Do at Its Next Meeting
• Kiplinger Energy Outlook: Drivers Feel the Effects of War in Iran
• Gas Prices Are Rising Fastest in These States

Inflation's always been a hot topic for economists. But since June 2022, when the Consumer Price Index (CPI) hit its highest level in 40 years (9.1%!) and the Federal Reserve hiked interest rates to their highest level in over 20 years, more folks have become interested in the data.

This is because inflation is a measure of our purchasing power. How much things cost and how quickly prices are rising directly impact not only how far a dollar will stretch for us, but also how far it will go for the companies that we invest in. And very few things make the stock market grumpier than a disappointing profit margin.

More recently, the escalating conflict between the U.S., Israel and Iran has caused oil prices to spike to their highest level in four years, muddying the inflation picture going forward.

February CPI, by the numbers

Higher gas prices had a marginal impact on the February CPI report, though it's likely March data will be affected to a larger degree.

According to the Bureau of Labor Statistics, headline inflation was up 0.3% from January to February, and 2.4% higher from the year prior. Both figures match what economists expected.

Shelter was the largest factor behind the monthly increase in headline CPI, according to the BLS, rising 0.2% month to month. Food and energy costs were also up.

Core CPI, which excludes volatile food and energy prices, was 0.2% higher month over month and up 2.5% year over year, arriving in line with the Street's forecasts.

What is CPI?

"CPI is a measure of the average price of that basket of goods and services over time," writes Kiplinger contributor Coryanne Hicks. "The specific goods and services within the CPI basket are based on information around 24,000 families and individuals give the U.S. Bureau of Labor Statistics on what they buy."

Since inflation peaked nearly four years ago, the CPI and core CPI have declined. Still, inflation remains too high for the Federal Reserve.

So while the Fed has cut interest rates by 1.75 percentage points this cycle in response to a cooling labor market, it's currently expected to keep the target range for the federal funds rate unchanged at its next three meetings, just as it did in January, to see how recent rate cuts are impacting inflation and employment.

So what does Wall Street think about the February CPI report? Here, we look at some of what economists, strategists and other experts have to say about the results and what they could mean for the Fed and investors going forward.

What experts have to say about the February CPI report

"While Wednesday's CPI for February does not account for the recent spike in oil prices, the print was in line with expectations, suggesting that inflation was stable before the Iran conflict. As we move towards the Fed's 2% inflation target and the employment picture continues to weaken, we're on track for at least one rate cut later this year." – Skyler Weinand, Chief Investment Officer at Regan Capital

"Steady disinflation on shelter is a good sign, but tariffs seemed to drive up the apparel category. These inflation numbers provide some comfort, but this month's spike in energy prices make them a relic of the past. Investors and the Fed are in uncharted territory right now, taking their cues from crude oil and tanker traffic in the Strait of Hormuz." – David Russell, Global Head of Market Strategy at TradeStation

"CPI printed in line with consensus expectations for February, a ho-hum release that reflects the period before the escalation of military action in the Middle East that will lift inflation readings next month due to higher energy prices. An encouraging sign was the moderation in both core and 'super core' CPI, showing that price pressures were not accelerating into the current oil price shock, which should give policymakers some degree of comfort. With today's release already largely 'stale' due to recent events in the Middle East, we expect financial markets to have a limited reaction to this news." – Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"Reading too far into today’s CPI in most respects amounts to arguing over the dinner menu on the Titanic, since the economy has struck an energy cost iceberg. In our view, it confirms that underlying inflation is tracking with employment – which is to say – downward trending. We are adding to our long duration in Treasuries." – Brad Conger, Chief Investment Officer at Hirtle Callaghan

"For investors, it’s important to look through short-term energy-driven moves and build diversification and portfolio resilience. The Federal Reserve is likely to remain on hold in the near term. Resilient growth and a labor market that is cooling without sharply deteriorating give policymakers time to assess incoming data. Near-term inflation risks are tilted slightly higher if geopolitical tensions keep energy prices elevated." – Gargi Chaudhuri, Chief Investment and Portfolio Strategist, Americas at BlackRock

Related content

• Kiplinger Energy Outlook: War in Iran Spells Higher Gas Prices in the US
• Why the Next Fed Chair Decision May Be the Most Consequential in Decades
• The End of 2%? An Investment Adviser's Case for Why the Fed Should Raise Its Inflation Target
• February Jobs Report Shows a Surprise Drop in Payrolls

The February jobs report, released ahead of Friday's open, showed a sharp slowdown in the labor market.

Job growth sizzled to start the year, with the U.S. adding 130,000 new jobs in January — more than double what economists expected — while the unemployment rate edged down to 4.3%.

But the latest release from the Bureau of Labor Statistics showed payrolls declined by 92,000 in February, missing economists' estimates for the addition of 50,000 new jobs.

The unemployment rate, which is derived from a separate survey, ticked higher to 4.4% from 4.3%.

January "was the strongest monthly gain in nine months, and runs counter to the recent narrative of a weak labor market," writes David Payne, staff economist and reporter for The Kiplinger Letter, in the Kiplinger jobs outlook. And a second straight decline in the unemployment rate "added to the surprise."

But Payne says there were "reasons to think that the January report may be more of a blip than a turnaround." For one, most of the gains came in health care and social assistance, while government, transportation and hospitality saw declines.

For another, "labor market data during the winter months are less reliable than at other times of the year, simply because seasonal shifts in hiring can be strong in winter."

In February, health care employment declined by 28,000, "reflecting strike activity," according to the BLS. Jobs in the information (-11,000), transportation and warehousing (-11.000) and the federal government (-10,000) also fell.

Average hourly earnings, a measure of inflation, rose 0.4% from January to February, and was 3.8% higher year over year.

The report also showed that December's jobs number was revised down by 65,000, from +48,000 to -17,000, and January's was lowered by 4,000, from +130,000 to +126,000. This resulted in 69,000 fewer jobs than previously reported.

Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, says the February jobs report puts the Federal Reserve "between a rock and a hard place. Significant weakening in the labor market would support a rate cut, but given the risk that higher-for-longer oil prices could trigger another inflation surge, the Fed may feel compelled remain on the sidelines."

According to CME Group's FedWatch, futures traders are pricing in majority odds that the first rate cut of 2026 will come at the Fed's July meeting,

With the February jobs report in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the February jobs report and what it means for the Fed

"February's employment report resumed the trend of a weakening labor market from last year. Block's (XYZ) decision to lay off 40% of its workforce is a sign of the job bloat in the economy. Artificial intelligence is NOT replacing jobs, but job cuts ARE funding AI expenditures." – Brad Conger, Chief Investment Officer at Hirtle Callaghan

"The February jobs data came in materially weaker than expected, pointing to a cooling labor market at a delicate moment for the U.S. economy. In practical terms, this likely reduces the probability of near-term rate cuts while increasing the odds of a more data-dependent stance over the coming months. If oil prices stabilize and inflation does not reaccelerate meaningfully, this jobs report could mark the beginning of a clearer pivot toward easing. However, if geopolitical tensions sustain upward pressure on energy prices, the Fed may remain reluctant to move quickly. The current setup shows markets expect the Fed to cut once, maybe twice, this year." – Daniela Hathorn, Senior Market Analyst at Capital.com

"A stunningly weak jobs number on the face of it. The Fed is being challenged on both sides of its mandate and the key question for investors will be whether or not the Fed is likely to look through commodity-driven inflation pressures to cut rates more aggressively in the months ahead. The impact of the report on markets may be muted in the short term, as the focus remains very much on what is happening in the Strait of Hormuz." – Stephen Coltman, Head of Macro at 21shares

"The trifecta of negative private payrolls, downward revisions, and a higher unemployment rate create an unambiguous negative print for the labor market. This release shows that the labor market remains stuck in 2025's trend of weak job creation. Job growth was firmly negative last month as were revisions to the prior two months. The unemployment rate – considered a first among equals data point given the uncertainty around labor supply stemming from reduced immigration flows – also rose. Today's report is a negative for risk assets given its read-through to a softer economic outlook in a period where the Fed is likely to remain on the sidelines." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"Indications of labor market weakness are a reminder to the Fed that there could be a price to pay for delaying cuts, although near-term policy remains dictated by the ongoing Middle East conflict. Developments in Iran and their potential consequences on inflation have overshadowed the U.S. employment picture to a degree, making the path forward to potential policy normalization less clear. We expect that the Fed will eventually complete the remaining two 'normalization cuts' to return rates to neutral, however the timing is up in the air given current uncertainty." – Lindsay Rosner, Head of Multi-Sector Fixed Income Investing at Goldman Sachs Asset Management

Related content

• What to Look Out for in Economic Data This Week
• Why the Next Fed Chair Decision May Be the Most Consequential in Decades
• U.S. Economy Will Gain Steam This Year

To help you understand what's going on in the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

2026 will be another rough year for farmers, marked by high production costs, lower farm income, escalating debt and an uncertain trade situation.

Net farm income will fall to $153.4 billion, down 0.7% from last year and 15.7% below the record highs seen in 2022. Cash receipts for crops and livestock will both decline, reflecting the downturn in commodity markets, which will be offset this year by more government assistance (up 45% from 2025). One exception: Cattle. Persistently high beef demand, coupled with the smallest cattle head count since 1961, will keep prices high.

Meanwhile, production costs will reach a record $478 billion, with property taxes, fees and electricity expenses all set to increase. Feed, fuel, fertilizer and other fundamental agriculture inputs have retreated from recent highs, but have settled at levels significantly higher than before the pandemic. Total farm-sector debt will increase to $624.7 billion. Underscoring the financial strain farmers are under, a majority plan to use the increased government aid to pay down debt instead of spending it on their operations.

Major crop prices are below break-even levels: Around $5 per bushel for corn and $12 per bushel for soybeans. Favorable weather stemming from the onset of El Niño is expected to keep output high and prices low, but lingering drought could present complications. At the start of the year, 32% of corn acres, 38% of soybean acres and 42% of winter wheat acres were in some sort of drought, which could pose a problem for planting if it endures into the spring.

The trade outlook will depend on the Supreme Court, which is poised to rule on the president’s tariff authority. Farmers would welcome a pullback in these duties, which have increased the cost of agricultural inputs and hurt the competitiveness of American exports. But even if the United States Supreme Court rules against the current administration, it’s unclear how quickly United States exports would recover. Many longtime trade partners are looking elsewhere. China, for one, has gone back to buying Brazilian soybeans after meeting a 12 million-ton quota agreed as part of a trade truce with the United States.

For now, expect the agricultural trade deficit to narrow slightly this year to $37 billion, down from $43.7 billion, with both exports and imports shrinking.

The result will be a mixed bag for food prices. The Department of Agriculture is forecasting an overall increase of 3.0% (1.7% for food consumed at home, 4.6% for food consumed away from home).

Consumers will benefit from price declines for household staples like eggs (-22.2%) amid improvements in fighting the spread of avian influenza. Dairy product and pork prices are also expected to fall slightly, while poultry (0.2%), fresh fruits (0.2%) and vegetables (2.0%) will see small hikes. By contrast, the cost of beef will rise by 9.4%. Sugar and sweets will see a 6.7% increase.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• What to Expect from the Global Economy This Year
• Another Down Year for Agriculture
• The U.S. Economy Will Gain Steam This Year

To help you understand what's going on in the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Major change is afoot in Washington. A new chairman of the Federal Reserve has been named to fill arguably the most important job in the country for shaping the course of the economy. What can we expect from the new chair? Kevin Warsh will do things differently once he is eventually confirmed to take over for outgoing Chair Jay Powell, in office since 2017.

He will want to tighten the Federal Reserve's focus, concentrating on core monetary and financial policy, and dispensing with what he has called side issues, such as climate change and combating inequality.

He also won’t let the Federal Reserve issue a digital dollar, though he does want it to police cryptocurrency. Will Warsh be a monetary hawk or dove? A bit of both. He favors cutting interest rates to give the economy a boost, which President Trump has made clear he wants the next chair to do.

He also wants to trim the Federal Reserve's holdings of Treasuries and mortgage-backed securities, which ballooned after the 2008 financial crisis and shot up again when COVID-19 slammed markets. Warsh believes so-called quantitative easing is permissible during real crises, but that such money printing otherwise tempts politicians to run bigger deficits.

Curbing the Federal Reserve balance sheet could push up long-term interest rates. Short-term credit markets could also grow volatile as the Federal Reserve shrinks its holdings. Expect Warsh to also operate differently from how Powell made policy. He’ll worry less about the latest economic data and stick to long-term goals for where he thinks interest rates should be.

So, the latest jobs or inflation report may matter less to Warsh and his colleagues during their regular deliberations. Look for him to trim the Federal Reserve's benchmark rate a couple of times this year. But if he thinks inflation is too high or not falling enough, he’ll raise rates.

Warsh, a former Federal Reserve governor, has blamed the central bank for letting inflation soar after the pandemic ended by keeping its policy too loose. Warsh thinks that inflation is a choice that central banks make, and he is determined to choose to combat it. When it comes to the economy’s prospects, Warsh is an optimist. He thinks that artificial intelligence and Trump’s deregulatory push will boost GDP growth. That in turn would raise tax revenues and help get today’s huge deficits under control.

Trillions in potential future revenue are riding on whether that vision comes to pass. Note that Warsh’s confirmation may not be smooth. Senator Thom Tillis (R-NC) has said he will hold up confirmation votes on any new Federal Reserve nominee until the probe the Justice Department has initiated against Chair Powell has been dropped. Tillis argues that the investigation is a political ploy to get Powell to resign and a threat to the Federal Reserve.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Content

• How the Federal Reserve Affects Mortgage Rates
• How Rising Interest Rates Can Affect You
• What Will the Fed do at Its Next Meeting
• Kiplinger's Economic Calendar for This Week

Inflation's always been a hot topic for economists. But since June 2022, when the Consumer Price Index (CPI) hit its highest level in 40 years (9.1%!) and the Federal Reserve hiked interest rates to their highest level in over 20 years, more folks have become interested in the data.

This is because inflation is a measure of our purchasing power. How much things cost and how quickly prices are rising directly impacts not only how far a dollar will stretch for us, but also how far it will go for the companies that we invest in. And very few things make the stock market grumpier than a disappointing profit margin.

That's why the January CPI report, which was released ahead of Friday's open, is one of the most-anticipated events on this week's economic calendar.

What did today's CPI report show?

According to the Bureau of Labor Statistics, headline CPI rose 0.2% month over month in January, and was 2.4% higher year over year. In December, CPI was up 2.7% annually.

Shelter was the largest factor behind the monthly increase in headline CPI, according to the BLS, rising 0.2% from December to January. Food costs were also up, though falling energy prices offset these increases.

Core CPI, which excludes volatile food and energy costs, rose 0.3% from December to January, and was 2.5% higher on a 12-month basis. In December, core CPI was up 2.6% year over year.

Economists expected the headline and core readings to both be 2.5% higher year over year.

What is CPI?

"CPI is a measure of the average price of that basket of goods and services over time," writes Kiplinger contributor Coryanne Hicks. "The specific goods and services within the CPI basket are based on information around 24,000 families and individuals give the U.S. Bureau of Labor Statistics on what they buy."

Since inflation peaked nearly four years ago, the CPI and core CPI — which excludes volatile food and energy prices — have declined. Still, inflation remains too high for the Federal Reserve.

So while the Fed has cut interest rates by 1.75 percentage points this cycle in response to a cooling labor market, it's currently expected to keep rates unchanged at its next two meetings, just as it did in January, to see how recent rate cuts are impacting inflation and employment.

One factor the Fed continues to monitor is President Donald Trump's tariff policies. While they've raised prices in some durable goods, including electronics and furniture, their broader impact has been less than many initially feared.

So what does Wall Street think about the January CPI report? Here, we look at some of what economists, strategists and other experts have to say about the results and what they could mean for the Fed and investors going forward.

What the experts say January CPI report

"On balance, we found today's report to be encouraging. The disinflation in primary shelter is continuing along, and there are few signs of an acceleration in the private sector rent measures that serve as forward-looking indicators. Tariff-induced price hikes probably have not fully worked their way through the data, but we are closer to the end than the beginning of this source of higher prices. For the Fed, a March rate cut looks highly unlikely, but the continued gradual pace of disinflation should keep prospects for additional rate cuts alive for later in the year." – Tom Porcelli, Chief Economist at Wells Fargo

"While normally these type of inflation readings would give the Fed the go ahead to continue to cut interest rates, the robust job numbers that came out on Wednesday means we seemingly are entering a 'gold medal' economy with strong GDP growth, a stabilizing job market and lower inflation across the board. Looking forward, we would expect this environment of relatively strong growth, juiced by higher tax refunds from the OBBB, an improving job market and a continued trend of lower inflation will keep interest rates in a steady range as we await Kevin Warsh's fresh perspective at the Fed, when he takes over in May." – John Kerschner, Global Head of Securitized Products and Portfolio Manager at Janus Henderson Investors

"This CPI report didn't just cool inflation — it shifted what matters next. At 2.4%, inflation is fading into the background, and behavior is doing more of the work than policy. Consumers are pushing back, companies are absorbing costs, and pricing power is thinning. Markets responded because this gives the Fed flexibility — and shifts the investor focus away from rate cuts and back to fundamentals. The next phase won’t reward macro bets, it will reward earnings discipline and balance-sheet strength." – Gina Bolvin, President of Bolvin Wealth Management Group

"CPI inflation was in line with expectations, but even with ongoing disinflation in shelter and used cars, other core goods and services still show lingering price pressure. With the labor market holding up better, that should keep the Fed on pause at least through April." – Sonu Varghese, Chief Macro Strategist at Carson Group

"AI is reshaping productivity, but it hasn't yet reshaped inflation. Until AI meaningfully offsets cost pressures, the Fed's path back to 2% won’t be frictionless. While inflation ran modestly firmer, labor market indicators continue to point to cooling without a sharp deterioration. Unemployment remained steady, reinforcing the Fed's ability to remain patient as it weighs progress on both sides of its mandate." – Gargi Pal Chaudhuri, Chief Investment and Portfolio Strategist, Americas at BlackRock

Related content

• Why Does the Fed Prefer PCE Over CPI?
• Why the Next Fed Chair Decision May Be the Most Consequential in Decades
• The End of 2%? An Investment Adviser's Case for Why the Fed Should Raise Its Inflation Target

The January jobs report came in much higher than expected, alleviating fears of a sharp slowdown in the labor market. The data also strengthens the case for the Federal Reserve to keep interest rates unchanged for the foreseeable future; certainly through the remainder of Jerome Powell's term as Fed chair, which is up in May.

According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by 130,000 in January, more than double economists' estimates for roughly 55,000 new jobs.

The figures for November were revised down by 15,000, from +56,000 to +41,000, while job growth for December was lowered by 2,000, from +50,000 to +48,000. The revisions resulted in a combined 17,000 fewer jobs than previously reported.

As for January, job gains were seen in health care (adding 82,000 jobs), social assistance (+42,000) and construction (+33,000). Federal government jobs declined by 34,000 in December, and are now down 327,000, or 10.9% since their October 2024 peak.

The unemployment rate, which is calculated from a separate survey, fell to 4.3% from 4.4% in December.

One noteworthy data point is that wage growth, a measure of inflation, was 0.4% higher compared to the final month of 2025 and up 3.7% year over year.

Also included in the January jobs report, which was delayed from its initial release due to the short-lived government shutdown, were benchmark revisions to previously reported nonfarm payroll numbers.

This update showed that 898,000 fewer jobs were created in the year prior to March 2025, lower than the 911,000 initially estimated in September. Job growth for 2025 was revised down by 403,000.

"Markets may have been expecting a downshift in today's numbers after last week's soft data, but the jobs market hit the gas pedal instead," says Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. "Today's data shows an acceleration in employment that was strong enough to drive unemployment lower – vindication for Chair Powell's holding pattern."

And the Fed is expected to remain on hold for at least its next two meetings. According to CME Group's FedWatch, futures traders are now pricing in a 94% chance the Fed will keep the federal funds rate unchanged when it meets in March, up from 80% one day ago. Betting odds are for the first rate cut of 2026 to come in June.

With the January jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the January jobs report and what it means for the Fed

"January's employment report was strong, which likely keeps the Federal Open Market Committee (FOMC) on hold for now. The bigger implication may be for stocks. A stronger job market will support the 'broadening trade' – the rotational to industrial cyclicals and consumer discretionary from technology. We like homebuilders, REITs and luxury goods as potentially under-appreciated beneficiaries of stronger growth." – Brad Conger, Chief Investment Officer at Hirtle Callaghan

"The January payroll report was a big one since it's been a while coming and we got massive revisions. But this isn't a big surprise since we already knew the labor market was weak last year. The good news is that the economy created 130,000 jobs in January, well above expectations – while that could be suspect given revisions, the unemployment rate (which isn't revised) fell to 4.3%. That means the labor market is not weakening further and the Fed isn't going to cut rates again anytime soon – that's the big picture." – Sonu Varghese, Vice President, Global Macro Strategist at Carson Group

"The great news from last month – twice as many jobs were created in January as expected – could easily be overshadowed by the final revisions number of -862k. However, if the recent jitters in the stock market are due to concerns of a weakening labor market and/or economy that is headed toward a recession, this report should alleviate those concerns in the short run." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"The January jobs report was full of positive surprises this morning, sending S&P 500 futures higher and lifting the 10-year Treasury yield from a five-week low. Market participants are paring back expectations for additional Fed rate cuts, settling back to two cuts by year's end. Despite labor market softening observed last year, we believe economic strength coming out of 2025 and carrying into this year should leave companies reluctant to fire, while tight labor supply should keep a lid on the unemployment rate." – Jennifer Timmerman, Senior Investment Strategy Analyst at Wells Fargo Investment Institute

"The economy is still churning out jobs, and there is little reason to be concerned about the labor market. The fundamentals are working in your favor – cooling inflation, strong earnings, plenty of consumer and enterprise spending and a Fed that's likely to give us 2-3 cuts. Pullbacks will happen and are buying opportunities. The market climbs a wall of worry, and the investors who stay disciplined are the ones who benefit. My year-end targets remain S&P 7,700 and Dow 55,000 – even through a 'sawtooth year' that likely includes a sharp 5-15% pullback. That conviction hasn't changed." – Robert Edwards, Chief Investment Officer at Edwards Asset Management

"The market got the jobs report it needed. Ultimately, this print is an indication that the feared softness in the labor market is not materializing and that the strong productivity-led economic growth we are experiencing is not coming at the cost of jobs. Despite tight spreads and elevated multiples, we view this as a favorable backdrop for risk assets." – Brad Smith, Portfolio Manager at Janus Henderson Investors on the Core Plus and Corporate Credit Teams

Related content

• Kiplinger's Economic Calendar for This Week
• Earnings Calendar and Analysis for This Week
• When Is the Next Fed Meeting?
• Why the Next Fed Chair Decision May Be the Most Consequential in Decades
• The U.S. Economy Will Gain Steam This Year

Who knew that monetary policy could be so exciting? The way the Federal Reserve Bank sets interest rates and manages the money supply might prompt some terse words among economists or some raised voices on CNBC, but it typically creates little controversy outside financial circles.

As with many things in the Trump administration, however, the president's nomination of financier, lawyer and former Fed governor Kevin Warsh to replace Jerome Powell in May has been mired in high drama.

Warsh, 55, is currently a lecturer at Stanford University and a partner in the family office that manages billionaire Stanley Druckenmiller's fortune. He served as a Federal Reserve governor from 2006 to 2011 after President George W. Bush made him, at 35, the youngest-ever appointee. A former Morgan Stanley executive and a Harvard-educated attorney, Warsh was credited by Ben Bernanke for his Wall Street savvy as the Fed navigated the Great Financial Crisis that started in 2008.

That résumé may sound par for the course — President Donald Trump called it "central casting." But even assuming Warsh wins Senate confirmation, it is safe to say that this is not the typical Fed-chair transition.

Trump's rhetoric and his administration's actions have raised the specter of a level of political interference in monetary policy that's unprecedented in the modern history of the central bank. And as if that weren't enough, the transition to a new Fed chair comes at a time when a mulligan stew of mixed economic indicators makes the Fed's next course of action with interest rates anything but clear. In short, the selection of Kevin Warsh as the next Fed chair may be the most consequential in decades.

Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.

A hundred years and counting

The Federal Reserve system as we mostly know it today started in 1913 after decades of fits and starts in establishing a national bank. It had its successes and failures, with the Great Depression notable in the latter category. A 1951 agreement between the Fed and the Treasury Department freed the Fed to use monetary policy to control inflation.

In 1977, an act of Congress directed the Fed to also use its policies to maximize employment, in addition to fighting price increases. This is called its dual mandate, because the two aims can be contradictory. Few other of the world's central banks try to achieve both goals.

Right now, the Trump administration seems intently, if not solely, focused on maximizing employment — and, if the president's social media posts are an indication, boosting stock prices. That policy would call for lower interest rates and is described as dovish in monetary-policy terms. The opposite approach, raising interest rates to slow down the economy and cut inflation, is called hawkish. The Warsh pick is curious, many say, because he has more of a track record of hawkishness than the other candidates Trump considered.

During his time as governor, Warsh repeatedly expressed concerns about inflation. After leaving the Fed, he criticized the central bank's policy of increasing the money supply for years after the financial crisis via a massive bond-buying program known as quantitative easing. That policy stoked economic demand and contributed to inflation. However, Warsh has recently expressed the view that lower rates are appropriate right now. He has been arguing that productivity gains from artificial intelligence mean the U.S. can have lower rates without risking a jump in inflation.

William Merz, head of capital markets research at U.S. Bank Asset Management, says Warsh has repeatedly said the Fed needs to intervene less in the economy, unless there is a crisis, and make fewer public comments. "I think there's probably an underappreciation for the extent to which Warsh believes the Fed is in need of significant reform," says Merz.

As Fed chair, Warsh would yield tremendous power. But ultimately, he would be just one of 12 votes on the Open Market Committee, the Fed's rate-setting body. The seven governors are joined by five of the regional Federal Reserve Bank presidents, four of whom rotate in and out each year.

"I think Warsh is seen as more credible, more independent," says Idanna Appio, portfolio manager of the Global Income Builder Fund at New York City–based asset management firm First Eagle Investments. "I think he has a better chance of bringing the rest of the committee along."

A consensus of current forecasts calls for no more rate cuts during Powell's tenure, through May, and the potential for one to two cuts in the remainder of 2026. That may shift depending on how the market comes to view Warsh's nomination.

It's also important to note that a cut in the fed funds rate doesn't necessarily translate into lower long-term rates, including mortgage rates, which tend to take their cues from the bond market. If bond traders see Fed rate cuts as the first step toward overheated markets and more inflation, they're likely to sell off long-term debt, causing long-term bond yields to rise, not fall.

A question of independence

Trump put Powell in the position of Fed chair in February 2018 but has repeatedly maligned him for a failure to cut interest rates more quickly. In mid-January, Trump said Powell "either is incompetent or he's crooked," and said, "That jerk will be gone soon." (Powell's term as a Fed governor does not end until January 2028; he has not said whether he intends to stay on in that role.)

Trump's comments came after Powell issued an extraordinary statement confirming that the Department of Justice had launched a criminal investigation of him. Although the DOJ is scrutinizing Powell's congressional testimony regarding the cost and extent of a renovation of the bank's headquarters, Powell said the threat of criminal charges is a consequence of the Fed "setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president."

The administration has also sought to remove sitting Fed governor Lisa Cook, claiming she committed mortgage fraud prior to joining the Fed, which she denies. The matter has reached the U.S. Supreme Court, whose decision will determine how far a president can go to shape the Fed's board.

"I'm not going to sugarcoat it — trying to threaten the independence of the world's most powerful central bank is a problem," says Liz Ann Sonders, the chief investment strategist at the Schwab Center for Financial Research. "It's not bombastic to say that we'd be in a world of hurt if somehow any administration was able to wrest control over monetary policy decision-making — and that should not be seen as a partisan statement."

Powell's successor will have to live up to a legacy that has grown in some quarters as Powell has stood up to Trump's exhortations. "I think we're very fortunate to have someone like Jerome Powell in the role of chair at the moment," says David Doyle, head of economics at Australian financial firm Macquarie Group.

But the experts we interviewed also acknowledged the blemish on his record: the failure to contain the post-pandemic inflation that gave Americans their first taste of sharply rising prices in four decades. Powell and the Fed get credit, however, for acting decisively once the problem became clear.

"A lot of people who want to criticize Powell will point to how inflation got out of hand in 2022 and how the Fed was a little bit late to recognize that inflation wasn't transitory," says Chris Zaccarelli, the chief investment officer of Charlotte, N.C.–based Northlight Asset Management. "However, once they did recognize their mistake, they moved quickly to raise interest rates, got inflation much more under control and, surprisingly, were able to engineer all of that without causing a recession."

Doyle says the pandemic and the associated shutdown were "hopefully a once-in-a-century event. I think that was tough for anyone to have gotten right."

The challenge today

No such crisis exists now — but in a way, that makes it harder to chart a course. On the one hand, inflation has been above the Fed's 2% objective for nearly five years. On the other, there's a host of weak economic indicators, including employment numbers, consumer sentiment and manufacturing activity.

"When we have a recession or when we have very high inflation, the policy outlook is very clear. What we have here is a little more nebulous, which is inflation that is slightly above comfort levels and growth that is slightly below," says Frances Donald, the chief economist at Royal Bank of Canada. "It is exactly the type of environment that creates a significant debate over the next move."

That, more so than an ideological divide, might explain the recent, unusual split votes within the Open Market Committee. In the December meeting, three of the 12 members dissented from the decision to lower the target range for the federal funds rate, the rate banks charge each other for loans, by 0.25 percentage point, to 3.5% to 3.75%. One member wanted a bigger cut, while two preferred to make no change at all.

In the January meeting, Christopher Waller, who was also considered for the chairmanship, and another governor wanted cuts when the committee held steady. "You have to go back decades in order to see that many dissents amongst voting members," says Zaccarelli. "It's completely reasonable to have differing opinions on the exact same data given that the future forecast looks a little muddier."

Investors, for their part, might want to buckle up. According to Daniel Siluk, a portfolio manager at U.K.-based Janus Henderson Investors: "Whenever a new Fed chair steps in, interest rate volatility often jumps higher as markets adjust to the fresh communication style and initial policy signals. There's a brief period of uncertainty, and overreaction, until the new chair finds their footing." Stocks fell slightly, bond yields were mainly steady overall, and the dollar rose on the day of Warsh's nomination.

In the meantime, outgoing chair Powell has some advice for his successor: "Stay out of elected politics," he said at the press conference following the January Open Market Committee meeting. "Don't get pulled into elected politics. Don't do it."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

• The New Fed Chair Was Announced: What You Need to Know
• What's Next for the Fed — as an Institution?
• How Would Kevin Warsh in the Fed Impact Savers?

After months of speculation — and years of criticizing his last pick — President Donald Trump announced his selection for the next chair of the Federal Reserve.

The president announced on Friday, January 30, that Kevin Warsh will be the next Fed chair. If approved by the Senate, he will take over when Jerome Powell's term ends in May 2026. Trump had been reviewing several candidates for some time now.

"I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM," Trump wrote on Truth Social. "I have known Kevin for a long period of time and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is 'central casting,' and he will never let you down."

In December, the president said his nomination will be "someone who believes in lower interest rates by a lot."

Who is Kevin Warsh, and how could he impact your life and your money?

What to know about Warsh

Warsh was Fed Chair Ben Bernanke's right-hand man during the 2008-09 global financial crisis and was his primary liaison to Wall Street, which earned him credibility he still retains.

Markets see Warsh as a source of stability should Trump continue to pressure the central bank. He served on the Federal Reserve Board from February 2006 through March 2011.

He was special assistant to the president for economic policy and executive secretary of the White House National Economic Council from 2002 through 2006, during the George W. Bush administration. From 1995 to 2002, Warsh worked for Morgan Stanley.

He's currently a visiting fellow in economics at Stanford University's Hoover Institution, a lecturer at the Stanford Graduate School of Business and a member of the Panel of Economic Advisers of the Congressional Budget Office.

Warsh is widely viewed as a "hawk" on monetary policy who generally favors higher interest rates rather than the risk of inflation.

At the same time, Warsh, who was said to be a candidate for Treasury secretary before Trump picked Scott Bessent, was on the short list because he has a great relationship with the president.

Warsh said in mid-2025 that "the independent operations in the conduct of monetary policy is essential," adding "that doesn't mean the Fed is independent in everything else it does."

Though he consistently took the hawkish line on inflation during his time inside the central bank, Warsh has more recently advocated for lower interest rates.

Powell's legacy

Current Fed Chair Powell's term comes to an end on May 15, 2026. He's served in this role since he was appointed by Trump in 2018 as the 16th chair of the Federal Reserve.

Powell navigated the economy through the economic trip-up of the COVID-19 pandemic and the inflationary period that followed.

Asked about his legacy in the December Fed meeting, Powell said: "My thought is that I really want to turn this job over to whoever replaces me with the economy in really good shape. That's what I want to do. I want inflation to be under control, coming back down to 2%, and I want the labor market to be strong. That's what I want. And all of my efforts are to get to that place. They have been all along. But, ultimately, that's what I want."

In the January Fed meeting, Powell offered his successor some words of advice. In addition to staying out of politics, he reminded the next Fed chair that their accountability is to Congress and maintaining this accountability will keep them legitimate to the American people.

He also said that the Fed staff is excellent.

Related Content

• When Is the Next Fed Meeting?
• What to Look Out for in Economic Data This Week
• What's Next for the Fed — as an Institution?
• How Worried Should Investors Be About a Jerome Powell Investigation?

To help you understand what's going on in the economy, business and politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

The economy will pick up the pace a little bit in 2026, with some help from Washington. However, it will have to overcome some mounting headwinds.

Look for Gross Domestic Product (GDP) growth of about 2.5% this year, a little better than 2025’s 2.1%. A few factors look set to give inflation-weary consumers a boost while encouraging businesses to ramp up spending.

Bigger tax refunds will hit bank accounts after the filing season opens late this month. Changes in the tax code enacted in last year’s tax overhaul should translate into $65-$100 billion more in refunds. Much of that extra money will be spent on things like car down payments, along with smaller purchases and, in some cases, paying down debt or extra savings. For lower-income households dealing with high prices, a bigger refund is no panacea, but it certainly helps. Refunds aside, consumer spending is strong, despite surveys showing consumers in a sour mood.

The wealthy in particular will keep spending, buoyed in part by hefty gains in their investments and their home values. Total household net worth is up 26% from three years ago, to $180 trillion.

And the Federal Reserve is going to trim interest rates a bit more this year, on the heels of last year’s cuts, making credit a little bit cheaper for many borrowers.

Other positives are linked to the economy’s underlying fundamentals. Productivity growth is perking up after many years of stagnating at low levels. Economists aren’t sure why, exactly, but output per worker is rising by about 2% now. Capital investment is climbing, driven in part by the tax law’s extension of 100% bonus depreciation, plus the continued frenzy of data center construction.

It won’t all be smooth sailing, though. Most obviously, hiring is way down and shows little sign of rebounding. There’s no sign of an outright jobs contraction, but monthly job creation is likely to bump along near December’s level of 50,000 new jobs. Employers aren’t laying off workers in large numbers, but they aren’t hiring eagerly, either.

Some are using AI to make do with less. One recent survey showed that 17% of businesses reported using AI for at least one function. For unemployed folks, it’s a daunting job market, and that’s something people with jobs are well aware of. If layoffs do mount, many workers will up their saving and spend less in response. Spending by the affluent could sputter if the stock market tumbles. The top 10% of households by income now account for half of consumer spending.

Tariff policies remain a moving target for businesses that rely on imports or are exposed to retaliatory duties on American goods, making it harder to plan.

And of course, the geopolitical situation remains highly uncertain. A crisis could break out in any number of trouble spots with no notice during this volatile year.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• What to Expect from the Global Economy in 2026
• The Economy on a Knife's Edge
• Kiplinger GDP Outlook

The January Fed meeting wrapped up on Wednesday, January 28, with the central bank's latest policy decision.

Following three straight quarter-point rate cuts to end 2025 and data showing inflation is holding steady, the central bank kept the federal funds rate unchanged this time around, as was widely expected.

"The decision to hold rates at 3.50% to 3.75% at today's meeting was never in doubt and we expect the Fed will remain on hold through June," says Michael Pearce, Chief U.S. Economist at Oxford Economics. "The Fed always moves more cautiously when rates are close to a neutral setting, and we think labor market conditions are stabilizing."

Pierce believes the biggest events shaping the central bank right now are the legal battles over Fed Governor Lisa Cook's potential firing and the Department of Justice investigation into Fed Chair Jerome Powell, both of which Powell refused to comment on during today's press conference.

Powell also refused to answer questions on President Donald Trump's potential pick to replace him, though he did offer up some words of advice for the next Fed chair.

The Kiplinger team reported live on the January Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Scroll for the updates.

How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2026 | How Does the Federal Reserve Work? | Quiz: How Well Do You Know the Fed?

Fed meeting schedule for 2026

The next Fed meeting, which runs from January 27 to January 28, marks the first gathering of 2026.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full Fed meeting schedule for 2026:

January 27 to 28

March 17 to 18

April 28 to 29

June 16 to 17

July 28 to 29

September 15 to 16

October 27 to 28

December 8 to 9

- Karee Venema

Expect more volatility this week, says Wedbush

Last week's volatility in the stock market, which saw the S&P 500 explore a 145-point intraday trading range and the Cboe Volatility Index (VIX) hit its highest level since November, was sparked by President Trump's turnaround on a potential annexation of Greenland and a new round of tariffs on Europe.

Wedbush analyst Seth Basham expects more volatility this week as market participants sift through a jam-packed earnings calendar and assess the January Fed meeting.

As for the Fed meeting, Basham expects the central bank to maintain a more cautious approach despite political pressure.

"We expect Fed Chair Powell to signal heightened caution at upcoming meetings," the analyst writes in a January 25 note. "With the administration running the economy hot and PCE inflation still roughly 80 basis points above the 2% target, policy changes are likely to pause for some time."

And given Powell is near the end of his term, Basham believes "he’s likely to maintain vigilance against inflation, even if it means disappointing equity investors and the President who are seeking easier financial conditions."

- Karee Venema

When does Jerome Powell's term as Fed chair end?

President Trump has not been subtle in his dislike of Fed Chair Powell. But the question of whether or not Trump can fire Powell is seemingly moot given that his term as Fed chair is up in just a few months – on May 15, 2026.

It's unlikely that those in Trump's inner circle will encourage him to disrupt the status quo and replace Powell before his term is over – which could potentially send stocks and bonds tumbling – given that there's such a small amount of time left.

And the president is widely expected to announce his choice for Powell's replacement any day now. Top candidates include former Fed governor Kevin Warsh, Director of the National Economic Council Kevin Hassett and Rick Rieder, BlackRock's chief investment officer of fixed income.

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

There are more rate cuts to come, just not this week

The majority of Fed members believe that additional rate cuts will be necessary at some point, says Goldman Sachs economist David Mericle, but he doesn't expect the next one until June.

"Chair Powell is likely to emphasize that the FOMC has just delivered three cuts that should help to stabilize the labor market and is well positioned for now while it assesses their impact," says Mericle.

And if the labor market steadies, rate cuts become less urgent, he adds.

Mericle thinks the Fed will issue its final cut in September, bringing the federal funds rate to a target range of 3.0 to 3.25%.

"We see the risks over the next year or two as tilted to the downside because we think hikes are quite unlikely but could imagine a few reasons for additional cuts, and our probability-weighted Fed forecast is a bit below both our baseline and market pricing," he notes.

- Karee Venema

Who gets to vote at the January Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2026 FOMC voting committee consists of:

Fed Chair Jerome Powell*

Vice Chair Philip Jefferson

Fed Governor Michael Barr

Fed Governor Michelle Bowman

Fed Governor Lisa Cook

Fed Governor Stephen Miran**

Fed Governor Christopher Waller

New York Fed President John Williams

Cleveland Fed President Beth Hammack

Minneapolis Fed President Neel Kashkari

Dallas Fed President Lorie Logan

Philadelphia Fed President Anna Paulson

In 2027, the presidents from Chicago, Richmond, Atlanta and San Francisco will rotate in as FOMC voting members, according to the Federal Reserve.

* Jerome Powell's term as Fed chair is up in May 15, 2026

** Stephen Miran's term as Fed governor is up on January 31, 2026

- Karee Venema

What is Wall Street expecting from the next Fed meeting?

The Federal Open Market Committee is widely expected to keep interest rates unchanged when its January gathering concludes on Wednesday.

Of more interest, writes Kiplinger contributor Dan Burrows, is how Chair Powell will manage his press conference as "the Fed's independence has come under question, and Powell is set to preside over just two more meetings before his term as Fed chief ends on May 15."

To get a sense of what Wall Street is expecting from the next Fed meeting, Burrows "turned to economists, strategists and other experts for their thoughts on monetary policy going forward."

Read what they had to say here: What Will the Fed Do at Its Next Meeting?

Who is Rick Rieder?

President Trump is expected to announce his pick to replace Jerome Powell as Fed chair any day now.

The conversation has been ongoing for several months, and many folks are by now familiar with the two Kevins: former Fed governor Kevin Warsh and Director of the National Economic Council Kevin Hassett.

Hassett has moved down the list in recent weeks after President Trump said he'd like him to remain in his current role, while another name has moved into contention: Rick Rieder, chief investment officer of fixed income and global head of asset allocation at BlackRock.

Mr. Rieder joined BlackRock, the world's largest asset manager, in 2009, and currently manages roughly $2.4 trillion in assets. He previously served as CEO of R3 Capital Partners and as head of global principal strategies at Lehman Brothers.

Rieder has served on several government panels, including the Federal Reserve Bank of New York's Investment Advisory Committee on Financial Markets.

Kalshi prediction markets currently put Rieder, whom Trump called "very impressive" in a recent CNBC interview, in the lead.

"Either of the two leading candidates, Rick Rieder or Kevin Warsh, are likely to be welcomed by markets as well-credentialed and more than capable of serving in the role," says Jason Pride, chief of investment strategy & research and Michael Reynolds, vice president of investment strategy at Glenmede.

- Karee Venema

Who appointed Jerome Powell as Fed chair?

Jerome Powell assumed the role of Fed chair on February 5, 2018, after being nominated by then-President Donald Trump, who was serving his first term in the White House.

Powell's initial four-year stint as head of the Federal Reserve ended in 2022, but he was reappointed for a second four-year term on May 23, 2022, after being nominated by then-President Joe Biden.

Powell initially joined the Fed's Board of Governors in 2012 after he was nominated by then-President Barack Obama.

While Powell's second term as Fed chair will expire in May 2026, he can remain on the Fed's board until January 2028.

- Karee Venema

It's a big week ahead for Wall Street

This week will be a busy one on Wall Street. In addition to the Fed meeting, market participants will also have a full earnings calendar to sift through.

Most notable are the handful of Magnificent 7 stocks reporting, including Meta Platforms (META), Microsoft (MSFT) and Tesla (TSLA), whose results will be released after Wednesday's close. Apple (AAPL) will report after Thursday's close.

The outlooks from Apple, Meta and Microsoft will be particularly crucial, says Raymond James Chief Investment Officer Larry Adam. "With AI investment still ramping up and profit margins expanding, Wall Street expects mega-cap tech to deliver another year of standout earnings growth: +25% versus +15% for the broader S&P 500."

Adam adds that "valuations may appear more compelling," with the price-to-earnings (P/E) ratio for the Mag 7 stocks at the lowest level since 2017. "Taken together, the setup may suggest that despite the early stumble, mega-cap tech still has plenty of room to outperform as the year unfolds."

- Karee Venema

The odds of a government shutdown are rising

The risk of a partial government shutdown looms after Senate Democrats said they would block a funding bill that includes spending for the Department of Homeland Security. This comes after federal immigration agents fatally shot another U.S. citizen this weekend in Minnesota.

Part of the deal reached to end the record-long government shutdown in November included a continuing resolution that would fund most federal agencies through January 30, 2026.

The House of Representatives has passed several annual funding measures in recent weeks and the bills were widely expected to pass the Senate until this weekend's fatal shooting of Alex Pretti.

"Importantly, one of the nine annual appropriations bills passed by the House is Homeland Security, which houses Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE)," say Wells Fargo economists Michael Pugliese and Tom Porcelli. "In the wake of the incident, some Senate Democrats who were widely expected to support the budget bill have pulled their support until there have been some policy and process reforms to CBP/ICE."

Another shutdown would leave the Fed in a tricky spot, the two add. "The lack of visibility that arises from receiving limited economic data could thrust an already divided FOMC into a period of stasis. Fed officials lamented the lack of clarity on inflation during the last shutdown. We expect they would again use this argument to delay additional cuts."

The January jobs report is currently scheduled for release next Friday, February 6, while the next Consumer Price Index (CPI) report is slated for Tuesday, February 11. Another government shutdown puts the data at risk of being delayed or canceled outright, as we saw last fall.

Related: What Does a Government Shutdown Mean for Stocks?

- Karee Venema

Where have all the Fed speakers been?

The Fed-speak has been nonexistent over the past week or so. That's by design. Since Saturday, January 17, and until Thursday, January 29, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent to which they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s. It was formalized in 2011 and reaffirmed in January 2025.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2028.

- David Dittman

Stocks close higher to start Fed week

It was a positive start to Fed week for the main equity indexes. At Monday's close, the blue chip Dow Jones Industrial Average was up 0.6% at 49,412, the broader S&P 500 had added 0.5% to 6,950, and the tech-heavy Nasdaq Composite was 0.4% higher at 23,601.

Over in the bond market, the yield on the 2-year Treasury note slipped 1.3 basis points to 3.592%, while the yield on the 10-year Treasury note fell 2.6 basis points to 4.213%.

Read more: Dow Rises 313 Points to Begin a Big Week

What the January Fed meeting could mean for consumers, according to Johnson Investment Counsel's chief economist

Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel expects the January Fed meeting to be "somewhat uneventful."

The Fed cut rates three times to end 2025 in response to a weakening labor market and recent guidance suggests the central bank wants to assess the impact of those cuts before it makes any additional moves, he explains.

While a pause may be disappointing to consumers, Zureick says that there is some good news. "At last month's meeting, 15 of 19 FOMC participants projected that at least one more 0.25% rate cut will be appropriate this year," he says. "Most economists expect that inflation should continue to progress toward the Fed's 2% target throughout 2026, which should allow the Fed to bring rates down a bit more without fear that easier monetary policy could lead to higher inflation."

Forecasts project two more quarter-point rate cuts, which Zureick believes is "reasonable given the current economic environment."

The economist notes that the appointment of a new Fed chair is one dynamic that could "alter the course of policy this year." And while it's unclear who President Trump will choose, Zureick points out that the common theme among the potential candidates "is that they are all somewhat supportive of continued rate cuts."

Still, consumers hoping to consolidate high-interest loans or refinance high-rate mortgages may not find relief from the Fed.

While the central bank "controls short-term interest rates, longer-term loans like mortgages are benchmarked to longer-term interest rates, which take their cues less from monetary policy and more from the overall health of the economy," Zureick explains. "If the economy continues to hold up, longer-term interest rates may stay elevated even if the Fed elects to cut rates a couple more times this year."

- Karee Venema

Futures are mixed ahead of FOMC meeting

Equity index futures suggested a mixed open about 45 minutes before the opening bell on Tuesday, the first day of the first Federal Open Market Committee (FOMC) meeting of 2026.

The S&P 500 and the Nasdaq Composite are in the green, but the Dow Jones Industrial Average is being weighed down by UnitedHealth Group (UNH).

UNH reported beat on earnings, missed on revenue and offered soft guidance. That's on top of the Trump administration proposing a lighter-than-expected increase in 2027 Medicare Advantage payments.

Meanwhile, as BofA Securities analysts Mark Cabana, Aditya Bhave and Alex Cohen observe, "The U.S. rates market expects little from the January FOMC meeting."

The analysts note the Overnight Index Swap (OIS) market is pricing just one basis point of rate-cut risk, while CME FedWatch shows a 97.2% probability the target range for the federal funds rate will remain 3.50% to 3.75% come Wednesday.

Cabana, Bhave and Cohen also see little change in the policy path following the meeting. "We expect Powell to remain strongly data dependent and emphasize a meeting-by-meeting approach," they write.

And, though questions will be asked, discussion of politics is a non-starter. "Chair Powell is likely to get peppered with questions about politics," they write. "He will most likely be asked about the DoJ investigation of his testimony on the Fed building renovations. We expect him to say that he has nothing to add to his January 11 statement."

Nor will the Fed chair explain why he attended oral arguments at the Supreme Court in the case of whether President Trump can fire Fed Governor Lisa Cook.

The BofA analysts suggest that Powell will probably be asked again whether he plans to stay on as a Fed governor after his term as chair ends: "We do not expect him to show his cards yet."

With President Trump intent on putting as many of his people in place at the Fed and lowering interest rates as soon as possible, a lingering Powell may be where most of any ensuing drama from this week's FOMC meeting lies.

– David Dittman

What will Waller do?

The December Fed meeting, which concluded with a third consecutive 25-basis-point (bps) rate cut, was notable for both the number as well as the nature of the dissents from that decision.

Fed Governor Stephen Miran, who was appointed by President Donald Trump to replace Adriana Kugler and took his seat on the board in September, wanted a 50 bps cut. Two other voters on the 19-member Federal Open Market Committee (FOMC) opposed any cut at all.

This time around, the only dissent is likely to come from those who want easier policy interest rates right now, including Miran and perhaps Michelle Bowman and Christopher Waller.

The base-case scenario is a target range of 3.50% to 3.75% for the federal funds rate after this FOMC meeting, as Nick Timiraos of The Wall Street Journal notes.

"Waller’s vote could draw particular scrutiny," Timiraos writes. "He is among the candidates Trump is considering to succeed Powell." President Trump has said he won't pick someone who disagrees with him that interest rates should be lower.

Waller is now a long-shot candidate, trailing late-arriving but fast-rising BlackRock (BLK) Chief Investment Officer Rick Rieder as well as Kevin Hassett and Kevin Warsh.

If Waller votes to cut this week, though, the president will like him more. On the other hand, as Timiraos concludes, "A vote with the majority to hold might burnish his credentials as an independent voice but cost him the job."

– David Dittman

Markets are mostly steady at midday

The main U.S. equity indexes were mostly higher at midday, with the S&P 500 and the Nasdaq Composite up 0.5% and 1.0%, respectively, but the Dow Jones Industrial Average down 0.8% mainly because of UnitedHealth Group (UNH, -18.8%).

The Treasury market is also mixed, with the 2-year U.S. Treasury yield down to 3.573% from 3.597% on Monday but the 10-year U.S. Treasury yield up to 4.217% from 4.211% and the 30-year U.S. Treasury yield up to 4.823% from 4.805%.

The U.S. Dollar Index, which measures the buck against a basket of currencies made up of the euro, the yen, the British pound, the Canadian dollar, the Swedish krona, and the franc, was down to 96.36 from 97.04.

Investors, traders and speculators are pricing in the prospect of another potential government shutdown in the aftermath of the federal government's aggressive enforcement of immigration laws in Minnesota.

That's on top of questions about central bank independence as the Federal Open Market Committee (FOMC) meets to discuss its policy on interest rates amid persistent inflation and continuing concerns about the labor market.

– David Dittman

Consumers are worried about maximum employment

Inflation is an ever-present concern for consumers and markets as well as makers of monetary policy. For the Fed, however, it forms only one half of a dual mandate.

"Maximum employment" is at least nominally as important as "price stability" for Fed Chair Jerome Powell and other voting members of the FOMC.

Some of them have made clear their preference for lower interest rates, citing a softening jobs market as the main threat to sustainable economic growth right now.

The most recent sentiment reading from the Conference Board could provide some fuel for a "get ahead of the curve" argument that acting now will stave off a fuller labor market meltdown.

Indeed, the Consumer Confidence Index fell to 84.5 in January from 94.2 in December, its lowest print since 2014, worse than anything during the COVID-19 pandemic. And it was mostly about jobs.

"The share of consumers saying jobs are 'hard to get' rose to a post-pandemic high," Wells Fargo economists Tim Quinlan and Shannon Grein write. "That took the labor differential (plentiful minus hard-to-get) to a post-pandemic low."

That's not the end of the story, of course: "It is always worth taking consumer confidence readings in context and remembering that vibes are not always fully reflected in spending."

Quinlan and Grein conclude with another caveat: "It still bears noting that consumers felt more confident at the height of the pandemic than they do now."

The economists attribute the drop to deterioration in the labor market, noting also that "persistent high cost of living combined with tariffs and foreign interventions are not doing anything to shore up confidence."

– David Dittman

Facts, feelings and data the Fed depends on

The Conference Board Consumer Confidence Index hit a near 12-year low in January. Best to classify this as "anecdata" rather than straight incoming data such as retail sales numbers reported by the Census Bureau.

There is a split in sentiment and behavior, at least as far as the most up-to-date information we have is concerned. There's even a conflict between sentiment indicators.

As Barclays economist Pooja Sriram notes, the Conference Board reading "shows a different signal compared with the January reading of the University of Michigan survey," which was up 3.5 points to 56.4. "The surveys show competing views about the labor market and the overall economy," Sriram adds.

Context for all that includes, of course, the longest government shutdown in U.S. history, which delayed retail sales reports late in 2025 and into 2026. And what we've seen lately has been a little choppy.

The release of September data was delayed by more than a month, and sales declined 0.1% in October but surged 0.6% in November, as we learned on January 14.

November retail sales exceeded expectations and suggested strong consumer demand. But we won't see retail sales data for January until February 10.

Regular reporting for this high-frequency indicator of consumer demand – which drives about two-thirds of the U.S. economy – is back on track. But messages for the Fed remain mixed and murky.

As Sriram writes, "Intensifying perceptions that jobs are becoming harder to obtain and that overall hiring is slowing have weighed on the overall consumer environment, resulting in the weak labor market outlook."

We'll see whether feelings translate into behavior in mid-February.

– David Dittman

What consumer stocks say about consumers

Here's another piece of data for you to follow when it comes to assessing the big picture: the relative performance of consumer staples stocks.

Yes, people are still spending money. But what are they buying? Is it toothpaste and toilet paper, cigarettes and booze? Or is it Tesla (TSLA) and Tapestry (TPR) for electric cars and iconic clothes?

Generally speaking, when consumer discretionary stocks are near the top of the sector rankings, it's bullish. But when Procter & Gamble (PG) and Altria Group (MO) lead, it's bearish.

Consumer staples underperformed the S&P 500 in 2025, 1.7% to 17.7%. Consumer discretionary added 7.4% last year.

So far in 2026, though, consumer staples are up vs the S&P 500, 6.6% to 1.6%. And consumer discretionary is up just 2.4%.

Whether (and the extent to which) the Fed is worried about the consumer remains to be seen. We'll get some answers on Wednesday.

But recent price action suggests we should at least pay attention for a potential broader shift in the stock market.

– David Dittman

Unemployment is low but angst is high

For Harris Financial Group Managing Partner Jamie Cox today's report from the Conference Board about consumers is just another brick in the proverbial wall of worry for the stock market to climb.

"This is one of the most bullish signs I've seen yet," Cox writes. "When GDP is over 3% and consumers say they are worried, yet spend like they aren't, they are, in fact, confident."

Comerica Wealth Management Chief Investment Officer Eric Teal has a more nuanced view: "The picture for the consumer remains very mixed, with the top earners benefiting from the wealth effect while the bottom 60% of the income distribution is being negatively impacted by policy changes."

Teal cites "shifting tariffs, sticky inflation, and housing affordability." He notes that tighter immigration enforcement means higher wages in some sectors and industries, and he is "cautiously optimistic on the U.S. consumer as tax benefits should be a tailwind in early 2026."

As for why consumers are down even though the unemployment rate remains low relative to historical averages, Deutsche Bank Chief U.S. Economist Matthew Luzzetti is on the case.

"This disconnect between weaker labor market sentiment and still relatively low unemployment is also observed in the NY Fed’s consumer sentiment survey," Luzzetti says.

It's a recent development too: "While sentiment and unemployment have been highly correlated in the past, sentiment has tracked weak hiring and low labor market churn rather than unemployment over the past 18 months."

The problem, as the people see it, is dynamism and the ability to get a job, according to Luzzetti. "The implication is that consumer sentiment about the labor market – and likely the broader economy – may not turn around until hiring and dynamism improve," he concludes.

– David Dittman

3 reasons the Fed won't cut interest rates this week

The prediction for Wednesday's Fed meeting is for rates to remain unchanged. There are three reasons for this.

First, comments from a number of Federal Open Market Committee (FOMC) members at the last meeting in December indicated that there was a desire to stop the "cut at every meeting" trend.

Second, GDP growth predictions for 2026 have been moving up of late as economists note still strong consumer spending and likely bigger tax refunds this spring.

The Fed doesn't want to cut interest rates in the face of a strengthening economy unless the unemployment rate is rising. But that hasn't happened yet.

Finally, Fed Chair Jerome Powell publicly pushed back against the administration in a speech two weeks ago, accusing it of pressuring the central bank to lower interest rates.

A rate cut this early after that would be interpreted as doing the White House's bidding, and the Fed has always jealously guarded its independence.

– David Payne

When Fed meetings move market

Investors, traders and speculators are more than 97% certain the target range for the federal funds rate will remain 3.50% to 3.75% at the conclusion of this week's Fed meeting.

But markets will be watching Jerome Powell's press conference, the first since the Department of Justice subpoenaed central bank officials and one of the last before he's replaced as Fed chair. And they will be moving.

The San Francisco Fed has built a new database on intraday reactions to FOMC meetings that, as Deutsche Bank strategist Matthew Raskin writes, allows us to see "which meeting aspects tend to be most market moving."

The database includes changes in U.S. Treasury yields and prices of other financial assets in 30-minute windows around Federal Open Market Committee statements and Summary of Economic Projections releases and 70-minute windows around the Fed chair’s press conferences.

Raksin compares the relative volatility impact on yields of FOMC statements and SEP release vs press conferences since 2019. He defines "relative volatility" as the "difference between the absolute yield moves in the press conference and statement windows."

As Raskin notes, "For non-SEP meetings like tomorrow's, volatility around the press conference is on average higher than volatility around the statement." The pattern flips for SEP meetings, with volatility around the statement higher.

"The underlying data reveals that the shift reflects an increase in volatility around statements when the SEP is published," he concludes, "as the projections convey additional information on the Fed rate path."

Raskin also cites "evidence that the SEP modestly reduces front-end volatility around press conferences, perhaps because the projections provide some anchor to near-term expectations that attenuate reactions to the chair’s comments."

– David Dittman

Markets are mixed on the first day of the Fed meeting

Stocks closed mixed on the first day of the first Fed meeting of 2026, the S&P 500 rising 0.4% and hitting new all-time highs and the Nasdaq Composite rallying 0.9% with multiple Magnificent 7 stocks reporting earnings this week.

The Dow Jones Industrial Average, weighed down by UnitedHealth Group (UNH, -19.6%), lost 0.8%.

The Treasury market was also mixed, with the 2-year U.S. Treasury yield down to 3.571% from 3.597% on Monday but the 10-year U.S. Treasury yield up to 4.233% from 4.211% and the 30-year U.S. Treasury yield up to 4.842% from 4.805%.

The U.S. Dollar Index, which measures the buck against a basket of currencies made up of the euro, the yen, the British pound, the Canadian dollar, the Swedish krona and the franc, was down to 95.53 from 97.04.

Looking ahead to Wednesday's conclusion of this week's FOMC meeting, Louis Navellier of Navellier & Associates notes that nobody expects any change in the federal funds rate.

"Jerome Powell is essentially a lame duck as we wait to hear who Trump will select to replace him in May," Navellier writes "which is expected soon." Fed funds futures pricing indicates the market doesn't see another move to lower interest rates until June.

Investors, traders and speculators will pay close attention to the Fed chair's press conference. "If Powell gives any indication that a cut may come before he leaves," Navellier says, "the market will rally."

Navellier adds that if the Fed "is looking for a reason to cut key interest rates, it appeared on Tuesday when the Conference Board announced that consumer confidence plunged in January."

Citing its new role as an exporter of energy, gold and pharmaceuticals as well as the blessings of the AI boom, including rising productivity, Navellier says "6% GDP growth will be possible" for the U.S. without adding to inflation.

"Deflation is the only risk that can potentially derail America and the world," Navellier concludes. "It will be the job of the new Fed chair to fight deflation and to spur consumer spending with lower interest rates."

– David Dittman

Stock futures are mostly higher on Fed Day

Stock futures are mostly in the green ahead of this afternoon's policy announcement from the Federal Reserve. At last check, futures on the tech-heavy Nasdaq were up 0.8% and futures on the broader S&P 500 were 0.2% higher as strong earnings from semiconductor equipment company ASML Holding (ASML) lift chip stocks.

Futures on the blue-chip Dow Jones Industrial Average are slightly lower.

Over in the bond market, the yield on the 2-year Treasury is up 0.6 basis point at 3.575% and the 10-year Treasury yield is 2.4 basis points higher at 4.247%.

- Karee Venema

Questions over Fed independence remain front and center, says GammaRoad Capital CIO

It's all but guaranteed that today's policy announcement from the Federal Reserve will leave interest rates unchanged and it's unlikely that Chair Powell will signal any additional cuts for the two remaining meetings he'll head.

"Unless the Fed delivers a surprisingly dovish tone to forward guidance, we believe this meeting will only serve to amplify the recent political pressure on the Fed's independence," says Jordan Rizzuto, CIO at GammaRoad Capital Partners. "Given that the next rate decision is two months away, this leaves ample time for increased rhetoric against the backdrop of deteriorating consumer sentiment driven by a softer labor market, persistently above-target inflation and the resulting affordability challenges facing the American public."

Rizzuto expects this elevated rhetoric puts the premium that U.S. assets have commanded over time at risk. "Increased expectations for a more dovish and less independent Fed would likely drive further weakness in the dollar, higher rates at the long end of the curve, and renewed concerns for an uptick in inflation," he adds.

- Karee Venema

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time today, January 28.

"Available indicators suggest that economic activity has been expanding at a moderate pace," the committee wrote in its December statement. "Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated."

As such, the FOMC voted to lower the federal funds rate by a quarter-percentage point to a range of 3.50% to 3.75%.

This time around, Goldman Sachs economists expect small changes to the statement. "The FOMC might remove the comment from December that inflation 'has moved up since earlier in the year' while continuing to note that it 'remains somewhat elevated,'" the group writes. "It might also add balance to the description of the unemployment rate, perhaps keeping that it 'has edged up' but adding that it 'remains low.'"

And while the December meeting had three central bankers dissent, Goldman Sachs expects only one this time, from outgoing Fed Governor Stephen Miran, who they believe will vote for a rate cut.

- Karee Venema

What time does Jerome Powell speak today?

Fed Chair Powell will host a press conference at 2:30 pm Eastern Standard Time today, January 28.

"Given recent events, Powell's presser is likely to focus on some non-economic issues – e.g., the recent DoJ subpoena, Governor Cook's case, who will be the next Fed chair, and whether Powell might remain on the Board," write a team of Deutsche Bank economists.

The team believes Powell will likely respond to any questions over the Justice Department investigation by referring to his January 11 video statement, where he responded to the accusations by saying, "threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

There's a good chance he will not comment on questions related to his successor and whether or not he will remain on the Fed's board through January 2028.

The group also expects Chair Powell to describe monetary policy as "well positioned," given that the current range of the federal funds rate, 3.50% to 3.75%, is close to neutral.

"He might also sound somewhat more sanguine on the labor market, while still emphasizing downside risks," the economists add.

- Karee Venema

S&P 500 briefly tops 7,000 before turning lower

With roughly 90 minutes left until the Fed releases its latest policy announcement, the main market indexes aren't making any major moves.

The blue-chip Dow Jones Industrial Average was last seen up 0.07% as UnitedHealth Group (UNH) trades higher following Tuesday's 20% drop.

The tech-heavy Nasdaq Composite is off 0.06%, while the broader S&P 500 is down 0.1% after it briefly topped the psychologically significant 7,000 level for the first time earlier.

Health care is the worst-performing sector at midday, while energy stocks lead as U.S. crude futures trade up 0.4% at $62.65 per barrel.

- Karee Venema

Another near certainty today: Powell's purple tie

The odds of that the FOMC will keep rates unchanged today are high. It's also a near-certainty that Fed Chair Powell will be wearing a purple tie during Wednesday's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

The Fed decision is in

The Federal Reserve stood pat in January, keeping the federal funds rate at its current range of 3.5% to 3.75%, as expected.

Sticky inflation and a stabilizing labor market keep the Fed on hold

Everything you need to know is in the opening sentence of the Fed's statement: "Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated."

In other words, the economy is growing solidly and inflation remains a concern, so the central bank is not cutting. Additionally, the Fed is not as worried about the labor market right now because it appears to be stabilizing and not getting weaker.

- David Payne

What changed in the January FOMC statement?

Changes to the FOMC's latest policy statement include the following:

Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated. (Previously read: Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.)

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate. (Previously read: The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.)

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 3‑1/2 to 3‑3/4 percent. (Previously read: In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3‑3/4 percent.)

The committee also removed this section that was in the December statement: The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.

- Karee Venema

Powell starts talking

Powell has begun his press conference. As is typical, he's wearing a purple tie to address the press.

Powell says it was important to attend oral arguments in the Supreme Court case on Trump's attempts to fire Lisa cook

The first question Chair Powell received was why he attended Supreme Court arguments over President Trump's attempts to fire Fed Governor Lisa Cook. Powell refused to answer, except to say he attended because it was important, and he would have had to explain if he didn't go.

He also added that Paul Volcker attended oral arguments in a 1985 Supreme Court hearing.

-David Payne

Powell refuses to answer questions on the DOJ investigation and staying on the board

Powell also refused to answer questions about the current Department of Justice investigation into his congressional testimony from last June, referring reporters to his January 11 video statement. He also said he will not answer any questions as to whether he will remain on the Fed board when his term as chair is up in May.

- David Payne

Powell says there was broad support among FOMC members to hold this time around

There was broad support among committee members at the January meeting for holding and waiting, says Powell.

Following three straight quarter-point rate cuts at the end of 2025, the FOMC, overall, believes it's in a good place to evaluate developments of this easing.

- David Payne

Powell's take on inflation

Regarding inflation, Powell says that most of the overrun in goods prices is from tariffs, but, he adds, that's good news. This is because these one-time price hikes will work their way through the data and eventually not be counted in the 12-month inflation rate.

He adds that it's encouraging to see that long-term inflation expectations are not moving up. This would be worrisome to the Fed if they were.

- David Payne

It's a great time for savers to capitalize on higher rates for 2026

With the Fed refraining from rate cuts, now is the time to find the right savings accounts to reach your savings goals in 2026. If you have short-term benchmarks, some of the best high-yield savings accounts I found offer up to 4.35% APY with no fees.

It allows you to earn a rate that outpaces inflation, before potential rate cuts later this year, since they could still lower rates in the interim on HYSAs. In turn, it can help you build momentum towards achieving your goals for the rest of the year.

Read more: The Best High-Yield Savings Accounts

- Sean Jackson

Powell gives one answer on politics

To kick off the press conference, Powell shut down five different questions related to politics. But he did answer one, from ABC News' Elizabeth Schulze, who asked him, broadly speaking, to explain the importance of keeping central banks separate from politics.

Clarifying that he was talking about central banks globally, Powell said that it's been positive "to not have direct elected official control over the setting on monetary policy" because elected officials could use monetary policy to affect the economy to better serve them during elections.

The separation, he said, has "enabled central banks generally not to be perfect, but to serve the public well."

Asked if he believes the Fed remains separate from politicians, he said it does, adding that "I'm strongly committed to that and so are my colleagues."

- Alexandra Svokos

Powell says a softening labor market is being balanced by a strong economy

When asked about the labor market, Powell said that it has definitely softened. However, it's hard to tell how much of the decline is a result of labor demand and how much is due to lower immigration levels reducing supply.

Powell admits that while this is concerning, there has not been a significant worsening. Additionally, the softening labor market is being balanced by solid economic growth and consumer spending.

- David Payne

Chair Powell talks geopolitical risk

Chair Powell would not answer a question on geopolitical risk, saying it's not the central bank's position to do so. Rather, the Fed focuses on oil price volatility and changes in trade policy.

He does say that the economy has done better than expected on trade changes. This is because the policies enacted were better than feared, and the economy is adjusting to the initial changes. Additionally, other countries did not retaliate.

- David Payne

Powell offers advice to the next Fed chair

While refusing to give specific commentary on his potential replacement, Chair Powell did offer some advice. In addition to staying out of politics, Powell reminded the next Fed chair that their accountability is to Congress and maintaining this accountability will keep them legitimate to the American people.

He also noted that the Fed staff is excellent.

- David Payne

There's still the potential for rate cuts this year, says Johnson Investment Counsel's chief economist

The Federal Reserve left rates unchanged this time around, noting "solid" economic growth and a "stabilization" in the labor market, says Brandon Zureick, chief economist and senior managing director at Johnson Investment Counsel.

With no update to the Summary of Economic Projections (SEP), the Fed's quarterly outlook for the future path of monetary policy and economic data, due until March, "consumers are left with little guidance about how the path of interest rates may evolve over the remainder of the year," Zureick says, though he adds that the two dissents in favor of another quarter-point rate cut show there's still support for additional easing.

The economist says that going forward, the path of interest rates will be dependent on the trajectory of the economy, specifically, inflation and the labor market.

"Ultimately, the Fed has adopted more of a 'wait-and-see' approach to monetary policy," Zureick explains. "While consumers didn't get the immediate interest rate relief they may have been hoping for, there is still the potential for modest rate cuts later this year."

- Karee Venema

Stocks are basically flat on Fed Day

The S&P 500 crossed the psychologically significant 7,000 level for the first time ever but trended lower into the Fed's decision to hold the target range for the federal funds rate at 3.50% to 3.75%.

Stocks were up and down for much of Wednesday's trading session and closed mixed amid a recovery for a big health care stock and solid signals from multiple AI stocks.

"The Fed song remains the same," Morgan Stanley Wealth Management Chief Economic Strategist Ellen Zentner writes. "Lower interest rates may be coming, but investors will have to remain patient."

"With signs of stabilization in the labor market and inflation holding steady," the economist observes, "the Fed is in position to play the 'wait-and-see' game."

Read more: S&P 500 Tops 7,000, Fed Pauses Rate Cuts

To help you understand what's going on in politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Starting the second year of his second term, Donald Trump has put the world on notice, deposing Venezuelan President Nicolás Maduro, toying with ideas to buy or seize Greenland from Denmark — a NATO ally — and warning U.S. adversaries like China and Russia to stay out of the Western Hemisphere.

Such bold moves could have big implications, both good and bad, for America’s standing in the world. By extending U.S. influence over Venezuela, Trump could hit America’s adversaries hard. Both China and Russia were key backers of Maduro, with Beijing also a major buyer of Venezuelan oil. Moscow, in turn, relies heavily on its own oil wealth and is leery about Washington having de facto control over more than half of the world’s petroleum reserves.

Elsewhere in the region, Cuba’s teetering economy could be pushed over the edge by the loss of Caracas as an energy supplier and middleman in global trade. But will he maintain this pressure campaign outside of Latin America? China and Russia both hope that Washington’s policy shift will leave them freer to pursue territory in their spheres of influence. So far, Trump is not entertaining this idea, even agreeing to tougher sanctions on Russia and threatening action against the Iranian regime amid anti-government protests.

At the same time, Trump is burning bridges with U.S. friends and allies, particularly with his efforts to acquire Greenland. Even if the threat of force is a ploy to get Denmark to give up the territory, it will sow distrust throughout the alliance, whose members were already concerned about U.S. commitment to their security. Expect this distrust to outlast Trump, even if NATO ultimately endures.

Meanwhile, the rest of the alliance will continue to prioritize increased defense spending. Security concerns could combine with trade tensions closer to home. Trump’s threats to take military action against drug cartels south of the border could worsen relations with North American free trade partners Mexico and Canada.

Trump seems to be betting his presidential legacy on bold action abroad, even invoking past commanders in chief, like James Monroe, as part of this push. Doing so can be a double-edged sword. On the one hand, presidents generally have more latitude on foreign policy, a plus when they are struggling to accomplish their domestic goals. On the other hand, the administration also risks stirring up regional chaos or getting bogged down in a conflict beyond its control — just ask George W. Bush. Trump has gotten lucky so far, but luck can be fleeting.

Also note that if Trump goes too far, there may be a congressional backlash. Republican lawmakers largely stand behind the president, but the initial GOP votes in favor of a Senate war powers resolution on Venezuela could signal trouble ahead.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• Stocks to Buy for a Trump Presidency
• Trump's Foreign Policy Overhaul
• What to Expect from the Global Economy in 2026
• 'Donroe Doctrine' Pumps Dow 594 Points: Stock Market Today

To help you understand what's going on in the economy, business and politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Congress is set for a busy and raucous 2026, despite the looming distraction of the November midterms, which typically slow down the legislative process. The GOP is eager to advance President Trump’s agenda while they still control the House and Senate, which won’t last if Democrats wrestle back control of one or both chambers after the midterm elections.

A government funding bill is first on the list. Funding for most federal agencies expires January 30, and without a bipartisan deal, those agencies will partially close. While a government shutdown is possible, odds are lower now after the 43-day closure that was forced by the Democrats last fall. Their appetite to play hardball has waned since that showdown.

Unifying House GOPers won’t be a breeze, as hard-liners and moderates haggle over priorities. But Speaker Mike Johnson (R-LA) has kept his party in line during past funding rows, though not easily.

Venezuela could upend funding deals. Democrats are incensed at President Trump’s invasion of the nation without congressional approval, and could withhold needed votes for military funding unless Congress also restricts future White House military actions against Venezuela. But that likely won’t happen, as Republicans overall have cheered Trump’s move. Regardless of congressional action, Venezuela will consume lawmakers this year and add to the widening divide of trust and cooperation between the parties.

The thorny issue of whether or not to extend Obamacare tax credits lingers. The subsidies expired on December 31, resulting in premium hikes for millions of Americans. But Democrats and moderate Republicans haven’t given up trying to address the issue. A deal still could be worked out during the early months of the year, as lawmakers in both parties fear a voter backlash in the midterms if health care costs aren’t lowered. Despite the challenges, some sort of fix is in the cards, if only a modest tweak.

There is a growing bipartisan push in Congress to slap Russia with sanctions over its ongoing war with Ukraine. Democrats have been clamoring for this for months, though GOPers have been reluctant, as they wanted to give the president time to broker a peace deal. But patience with Russian President Vladimir Putin has run out, and lawmakers are ready to move forward with sanctions. Trump seems to be on board.

Tech issues also will be front and center in 2026, though whether any bills successfully clear both chambers is uncertain. Many in both parties want stronger regulations for artificial intelligence. Ditto for rules for the expanding cryptocurrency market. Trump favors a more hands-off tack. But compromises may gel as the year proceeds.

The upcoming ruling on Trump’s tariff power could put Republicans in a bind. Many of them aren’t fans of the tariffs. But if the Supreme Court rules against Trump, he will pressure lawmakers to take up legislation imposing the tariffs themselves.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• Will Soaring Health Care Premiums Tank Your Early Retirement?
• Trump Tariffs Update: SCOTUS, New Levies and What's Ahead
• What to Expect from the Global Economy in 2026
• Trump's Foreign Policy Overhaul

How did the stock market perform during the first year of the second Trump administration? In short, the main U.S. equity indexes closed 2025 at or near all-time highs after posting double-digit annual gains as they did in 2024 and 2023. And the direction of the major trend remains up.

Equity indexes across the world rallied in the face of what many market participants describe as historic uncertainty throughout the 12 months. Most encouraging is the fact that the upside was driven by earnings growth as opposed to valuation expansion.

As Carson Group notes, "The S&P 500's 17.9% return in 2025 came mostly from profit growth, powered by sales growth and margin expansion." The math shows 14.3% of the S&P 500's upside was due to earnings growth (including 5.5% sales growth and 8.8% margin expansion), 2.1% was a result of multiple expansion, and dividends accounted for 1.5%.

"2025 offered a reminder that investors can still make meaningful progress in an environment that rarely felt calm or straightforward," Sequoia Financial Group writes in its year-end review. "Progress," Sequoia observes, "was earned through discipline: Staying invested when headlines were unsettling, leaning on diversification when it was uncomfortable, and letting fundamentals — not sentiment — set the tone."

The year will likely be memorialized with multiple entries on a widely circulated chart that plots major economic, political and social disruptions on a long-term "up and to the right" price line. Perhaps the "long 2025" trade began on November 5, 2024, when Donald Trump won the U.S. presidential election.

In January 2025, Trump was the first president to be inaugurated for a second but nonconsecutive term since the late 19th century. From Election Day to Inauguration Day, the S&P 500 gained 4%.

Last April will likely be defined by "Liberation Day," at least from a stock market perspective, for years to come. The fourth quarter was marked by the longest government shutdown in American history.

Yet, despite unpredictable tariffs and lingering inflation, volatile interest rates and murky monetary policy, political upheaval and consumer pessimism, stocks extended the long-term trend.

As of the closing bell on December 31, 2025, the broad-based S&P 500 read 6,845.50, up from 5,881.63 on December 31, 2024, a price-only rise of 16.4% that increases to 17.9% when you add in dividends. The blue-chip Dow Jones Industrial Average generated a total return of 14.9%, and the tech-heavy Nasdaq Composite added 21.4%.

"The foundation for better markets was quietly being rebuilt, even as sentiment wavered," Sequoia Financial Group concludes. "As 2026 begins, the conditions are in place for returns to broaden beyond a narrow group of leaders."

At the end of the first year of the second Trump administration, it all adds up to a healthier backdrop for global equities.

When and why stocks perform well

It wasn't a straight line higher, and it never is. But three straight years of double-digit gains for all three main indexes is impressive, even if the first year of the second Trump administration lagged 2024 and 2023, when the S&P 500 was up 25.0% and 26.3%, the Dow 15.0% and 16.2% and the Nasdaq 29.6% and 44.6%, respectively.

On a Trump-vs-Trump basis, the first year of the second Trump administration was worse than the first year of the first Trump administration. The Nasdaq surged 29.6% (price plus dividends) in 2017, while Papa Dow added 28.1%, and the S&P 500 increased 21.8%.

It’s important to understand, though, that among the innumerable factors in the countless decisions that drive day-to-day price action, even the actions of this heavy-handed chief executive amount to not much more than short-term noise.

That's not to say stocks won't respond. The Cboe Volatility Index (VIX), which measures expectations for 30-day forward-looking price movement for the S&P 500 and is known as the market's "fear index," got up to 60.13 on April 7. Then it quickly settled back into normal range, from 12 to 20, where it's resting right now.

The bond market will also respond, and in a way that enforces the only kind of discipline this president will heed. Note that the yield on the 10-year U.S. Treasury note was 4.163% as of December 31, 2025, vs 4.573% as of December 31, 2024.

The U.S. Dollar Index (DXY) closed at 108.58 on December 31, 2024, and rose to a recent high of 110.18 on January 13, 2025, a week before Trump's second inauguration. It closed the year at 98.28. As it is with market rates, what investors, traders and speculators track here is stability, or the change in the rate of change.

Market-based rates and the DXY have been volatile, but the process of discovering the price of such things as Trump's tariffs and his attacks on central bank independence revealed, again, that the foundation of the global financial system is solid – solid enough to support a resilient stock market.

Since April, both rates and the dollar have been relatively quiet.

What 2025 means for stocks in 2026

It is a market of stocks — many, many more than the Magnificent 7 stocks — but Nvidia (NVDA) and the AI revolution remain the fundamental force underneath it all right now.

As Sequoia says, spending on AI, the cloud and other infrastructure surged in the second half of 2025 – "but this time, the payoff was measurable." AI- and tech-related names drove earnings growth and equity returns last year, accounting for about 67% of the former and 60% of the latter.

At the same time, as Sequoia writes, "What once looked like concentrated leadership increasingly resembled genuine reinvestment and a powerful structural shift in corporate profitability."

Whether we're in an AI boom or an AI bubble is and will remain a fascinating debate. In the meantime, participation is expanding and leadership is changing.

Global stocks, as measured by the iShares MSCI ACWI ex US ETF (ACWX), generated a total return of 33.6% in 2025. Expansion of the bull market beyond U.S. borders is a good thing.

So is expansion of the bull market within U.S. borders. The Russell 2000 Index (RUT), for example, was up 12.8% in 2025, but in September the index of small-cap stocks established its first new all-time high since November 2021.

The Nasdaq's number shows tech stocks led again in 2025, but — and this is another broadly positive sign for 2026 — leadership is rotating. Capital is flowing to industrial stocks and utility stocks — the so-called picks and shovels for the AI revolution. Materials stocks are positioned for similar upside based on similar demand-side catalysts.

Meanwhile, health care stocks surged during the fourth quarter and topped the sector rankings with an 11.7% total return. You're unlikely to see a bull market without financial stocks participating, and the trend is solid here as well, with the group up 15% for 2025, 2% in the fourth quarter and 3% in December.

As JPMorgan Asset Management Global Market Strategist Meera Pandit writes, returns in 2023 and 2024 were driven mostly by multiple expansion, and they were also highly concentrated. The Mag 7 drove 63% of returns in 2023 but just 43% in 2025.

"What's more," Pandit adds, "profits have become less concentrated," with the Mag 7 responsible for two-thirds of profit growth in 2024 vs an estimated 43% for 2025. "Profit growth has broadened out," the strategist concludes, "with financials, industrials, utilities and materials all enjoying double-digit year-over-year profit growth in 3Q25."

About DJT

For the record, Trump Media & Technology Group (DJT) generated a total return of -61.2% for the 12 months ending December 31, 2025. DJT hit its high for the year 10 days before the president moved back into the White House.

DJT stock bounced late in the year when Trump Media merged with TAE Technologies to create a publicly traded nuclear fusion company focused on building utility-scale power plants to meet rising AI energy demand.

Nevertheless, the nuclear revolution, itself a product of the AI revolution, remains a viable theme in 2026. Other themes will emerge this year, too, sustaining the long-term trend like sector rotation and changing leadership do.

Let's agree with Carson Group that to say "expect volatility in the stock market" is a cliche. As their data shows, in an average year, you'll see a drawdown of about 14%. Volatility is a "toll" you pay, whether Trump-related or not.

At the end of the day, and as 2025 shows, over the long term, you'll be rewarded if you stay invested.

Related content

• 5 Stocks to Buy for a Trump Presidency
• Best and Worst Presidents (According to the Stock Market)
• Best Stocks to Buy Now

The latest Consumer Price Index (CPI) report showed inflation is holding steady, though key areas such as shelter, food and energy saw prices rise. The data will likely keep the Federal Reserve sidelined at its January meeting, with the central bank all but guaranteed to keep interest rates unchanged.

According to the Bureau of Labor Statistics, headline CPI was up 0.3% from November to December, faster than the 0.2% rise seen the month prior and arriving in line with economists' expectations.

The CPI was 2.7% higher year over year, matching November's increase and economists' estimates.

Shelter was the largest factor behind the monthly increase in headline CPI, according to the BLS, rising 0.4% from November to December. Food and energy costs were also up.

Other areas that saw price increases included airfare and hospital services, while used cars and trucks and household furnishings saw prices edge down.

Core CPI, which excludes volatile food and energy prices and is considered a more accurate measure of underlying inflation trends, increased 0.2% month over month and rose 2.6% compared to year prior, matching what was seen in November and coming in below expectations.

"Economists were worried about some statistical resets after the government shutdown, but the bigger disinflation trend continued," says David Russell, global head of market strategy at TradeStation.

Russell adds that the report is good news for those worried about inflation reaccelerating. And while the December CPI "probably won't have much influence on Fed policy given the coming change in leadership ... it keeps expectations on track for lower rates and likely supports risk appetite."

Indeed, rate-cut expectations are little changed following this morning's inflation data. According to CME FedWatch, futures traders are pricing in a 95% chance the Fed will keep the federal funds rate unchanged at its January meeting, down from 95.6% one day ago. The first quarter-point rate cut isn't expected until June, with a total of two priced in for the year.

That said, with the December CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the December CPI report

"By most accounts, inflation is unlikely to drop to the 2% target in 2026, although it may gravitate towards that target, assuming that Fed independence stays intact. Some of the impact on inflation from tariffs hasn't been fully reflected in numbers, while other pockets of inflation reflect more structural problems (e.g., the price of beef and related items)." – Carla Nunes, Managing Director within Kroll's Financial Advisory Practice

"We've seen this movie before — inflation isn't reheating, but it remains above target. There's still only modest pass-through from tariffs, but housing affordability isn't thawing. Today's inflation report doesn’t give the Fed what it needs to cut interest rates later this month." – Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"Inflation has been a little above the Fed target, but that masks some better news below the surface. The rate of increase has been relatively steady, and that should be good news for the markets. There are no indications that prices are likely to spike even after the impact of inflation and higher mortgage rates. The Fed still has some room to move, especially given weaker job creation and downward revisions in the latest report, but they may choose to wait and see if the impact of tariffs is really transitory. Rates are still likely to come down, but the timing is getting a little more cloudy." – Scott Helfstein, Head of Investment Strategy at Global X

"Shelter inflation showed some strength and will be an area to monitor going forward since it will continue to be understated until the April CPI release due to the missed sampling window in October. While investors will cheer this release as further evidence of disinflationary progress, the Fed will remain in 'wait and see' mode given the uncertainty until more distance came be put between the data and the shutdown. This release is positive for risk assets and increases the odds that the Fed will provide additional monetary policy support in 2026." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"Core CPI inflation was on the softer side, signaling lower upside risk for inflation (especially from tariff-impacted core goods). We’re still unlikely to get another cut from the Federal Reserve in Q1 thanks to more solid labor market data in December, including lower unemployment. Still, the lower inflation print will allow the Fed to continue focusing on labor market risks." – Sonu Varghese, Global Macro Strategist at Carson Group

"Today's CPI release is a welcome dose of hard data in what has been a light-data, heavy-news environment. Ultimately, the data reinforces the Goldilocks environment. That said, inflation prints are likely to shift from being a primary market trigger to more of a background constraint as the market becomes increasingly focused on the risks to Federal Reserve independence. We continue to like being long risk, avoiding the news treadmill and positioning instead for durable, tradeable themes." – Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management

Related content

• How Worried Should Investors Be About a Jerome Powell Investigation?
• When Is the Next Fed Meeting?
• How the Federal Reserve Affects Mortgage Rates
• An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your Retirement

The Department of Justice served the Federal Reserve with grand jury subpoenas on Friday and threatened a criminal indictment related to Fed Chair Jerome Powell's testimony before the Senate Banking Committee last June about a multi-year project to renovate historic buildings.

That's according to a Sunday evening statement from Powell, whose term as Fed chair expires in May.

"This unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure," Powell said. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

President Trump told NBC News Sunday he was unaware of either the Justice Department's investigation or its subpoenas and said they weren't politically motivated.

"The DOJ's investigation follows a year in which the president has made it clear he is unhappy with the Federal Reserve's monetary policy stance," Wells Fargo economists Tom Porcelli, Sarah House and Michael Pugliese observe, "which could have spurred administration officials to open up the investigation without an explicit green-light from President Trump."

Kevin Hassett, the director of the National Economic Council and one of the top candidates to replace Powell as Fed chair, said the investigation is a positive step toward accountability to the public. "I think it's really important to understand where the taxpayer money goes," Hassett said outside the White House on Monday morning, according to The Wall Street Journal. Hassett also said Powell is "a good person."

Should you be worried about a Fed investigation?

If you're worried about President Trump, central bank independence and what's next for the Fed, Barclays Head of Global Research Ajay Rajadhyaksha has a simple message for you: "The lesson of 2025 was that investors should ignore the constant noise and headlines and focus on underlying macro data and the sustainability of the AI narrative."

The S&P 500 generated a total return (price gains plus dividends paid) of 17.9% last year, and the index is off to another solid start so far this year with a gain of 1.8%. That includes one new all-time closing high the widely watched benchmark set during the first full week of trading following the 38 it notched in 2025.

"2026, we think, is more of the same. We do not expect a material risk-off, despite weekend developments," Rajadhyaksha suggests.

Is the market worried about a Powell investigation?

Wells Fargo economists Porcelli, House and Pugliese agree with Rajadhyaksha that the administration's most recent effort won't alter the near-term course of monetary policy. At the same time, they observe, the investigation will make it more difficult for the next Fed chair to build a consensus among the 19 members of the FOMC.

"We suspect the investigation may be an effort by the administration to put pressure on Powell to leave the Board of Governors entirely by May," they explain. "An open investigation may increase the prospect of him staying to add his weight to preserving central bank independence."

Still, the Wells Fargo economists say it's "more likely than not" that Powell leaves the Fed in May after 14 years of service.

Meanwhile, as of midday Monday, January 12, federal funds rate futures pricing reflects a 95.0% probability Powell and company hold the target range for its main benchmark at 3.50% to 3.75% following the next Fed meeting later this month. That's down from 95.6% on Friday.

"Bonds are the ultimate guardrail," Rajadhyaksha concludes. "That is why, we believe, fixed income markets have reacted in a measured fashion to the overnight shock." He adds that market-based measures of inflation are "only slightly higher" as well.

"These reactions are similar to those on August 17, the day the administration attempted to fire Governor Cook," Rajadhyaksha writes. "If the bond market truly worried that Fed independence had taken a lasting hit, the reaction would arguably have been much bigger."

Related content

• 5 Stocks to Buy for a Trump Presidency
• What CEOs Say About President Trump and Fed Chair Powell
• The Kiplinger Letter's 10 Forecasts for 2026

The December jobs report came in lighter than expected, but a lower unemployment rate is likely to encourage the Federal Reserve to keep interest rates unchanged when it meets later this month. Still, market participants are hopeful for at least two rate cuts this year.

According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by 50,000 in December, falling short of economists' estimates for the creation of roughly 55,000 new jobs.

The figures for October were revised down by 68,000, from -105,000 to -173,000, while jobs growth for November was lowered by 8,000, from +64,000 to +56,000. The revisions resulted in a combined 76,000 fewer jobs over those two months than previously reported.

As for December, job gains were seen in health care (adding 21,000) and food services and drinking places (adding 27,000). Federal government jobs increased by 2,000 in December, but declined by 277,000, or 9.2%, throughout the year.

The unemployment rate, which is calculated from a separate survey, fell to 4.4% from 4.6% in November. The data also showed that wage growth was 0.3% higher compared to November and up 3.8% year over year.

"The December jobs release provided the first clean read on the labor market since the government shutdown ended, but did little to provide clarity about the state of the labor market given its mixed reading," says Jeff Schulze, head of economic and market strategy at ClearBridge Investments.

On one hand, notes Schulze, the falling unemployment rate eases some concerns over labor market weakness. But the negative revisions "revealed fewer jobs created than previously believed with private payrolls bearing the brunt of the downgrade."

Schulze believes this should keep the Fed on hold for now, but today's report "keeps hopes alive for further monetary policy accommodation later in 2026."

According to CME Group's FedWatch, futures traders are now pricing in a 95% chance the Fed will keep the federal funds rate unchanged when it meets in January, up from 89% one day ago. Betting odds are for the first quarter-point rate cut of 2026 to come in June, with at least one more anticipated by year's end.

With the December jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the December jobs report and what it means for the Fed

"At first glance, this is a really positive report — the unemployment rate dropped down to 4.4% and the average hourly earnings jumped up to 3.8%, however, it will be easy for the skeptics to point out a very meager increase of 50k in jobs. In essence, we are seeing validation of the idea that job creation is very weak and companies have been letting workers go at a slow pace. There aren't any red flashing lights indicating an imminent recession, but there are plenty of yellow warning lights flashing and there is the risk that we could approach stall speed." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"The decline in the jobless rate reinforced expectations for the Federal Reserve to leave policy unchanged at its January meeting. Considering the body of data we've observed in recent weeks, we think the labor market stabilized late last year, and the U.S. economy exited 2025 on firm footing. We continue to look toward positive policy and economic tailwinds that we think will spur a reacceleration in economic growth in 2026. We still expect two more quarter-point Fed rate cuts, likely in the first half of this year." – Jennifer Timmerman, Senior Investment Strategy Analyst at Wells Fargo Investment Institute

"Today's report confirms what we think has been evident for some time — the labor market is no longer working in favor of job seekers. Until the data provide a clearer direction, a divided Fed is likely to stay that way. Lower rates are likely coming this year, but the markets may have to be patient." – Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"The December jobs report returned to its regular schedule and delivered plenty for markets to digest. On the surface, this paints a picture of continued labor market resilience, with wages keeping pace with inflation, something market bulls will welcome. Underlying sector dynamics will be important to consider going forward. More sectors are starting to slow alongside manufacturing, while health care continues to show strength. Risk-on sentiment remains intact for now in portfolios, but the data effectively removes any chance of a January Fed rate cut." – Lara Castleton, US Head of Portfolio Construction and Strategy at Janus Henderson Investors

"The good news is that the economy only needs 50K jobs/month to keep the labor market stable — the better news is that incomes are up and growing. Lower rates are coming from the Federal Reserve." – Jamie Cox, Managing Partner for Harris Financial Group

"For markets, the immediate takeaway is broadly supportive for risk assets. Softer jobs data reduces the likelihood of further rate hikes and keeps expectations tilted toward eventual easing later in the year. Equities may find support from the idea that growth is slowing in an orderly way, while bond yields could remain under pressure as investors price in a more accommodative Fed. At the same time, the U.S. dollar may struggle to extend gains if rate expectations continue to shift lower." – Daniela Hathorn, Senior Market Analyst at Capital.com

Related content

• Kiplinger's Economic Calendar for This Week
• Earnings Calendar and Analysis for This Week
• When Is the Next Fed Meeting?
• Best Stocks to Buy for Fed Rate Cuts
• The Kiplinger Letter's 10 Forecasts for 2026

To help you understand what's going on in the economy, business and politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

To help you make plans for the year ahead, here are 10 of our top forecasts for 2026 for the economy, politics, new technologies and more.

The economy
1) The economy will hold up relatively well. But it won’t feel especially good for everyone. The pattern of K-shaped spending — high-income folks splurging due in part to their investments doing well, while lower-income households curb their spending — figures to continue and may grow more pronounced. Once again, inflation won’t return to the 2% level the Federal Reserve aims for, while anemic hiring appears set to continue. That’s a tough combination for less affluent consumers. But barring a big drop in financial markets, the wealthy will spend freely.

2) The Fed will find itself in a tough spot, trying to encourage faster hiring by cutting rates a couple of times while inflation is still above the 2% the Fed wants to reach. Whichever candidate President Trump chooses as the next Fed chair will favor trimming rates to goose the economy, but he is likely to face dissent from Fed officials who think the central bank should be more focused on wrestling inflation down.

3) Look for the frozen housing market to finally thaw a bit. Mortgage rates should settle into the low to mid-6% range — not exactly cheap, but low enough to get more potential buyers off the sidelines and into the game. In fact, buyers should regain a bit of leverage in some parts of the country where the inventories of homes for sale are running above demand, namely the Sun Belt, Florida and Texas figure to see prices dip for that reason, in the order of 2-5%. But the Northeast will see prices rise by similar levels, due to lower inventory and stronger demand.

4) After spiking in 2025, U.S. tariff rates will pull back a bit in 2026, on average, as trade deals or negotiated exemptions take effect, and some duties are likely nixed by the Supreme Court. The uneasy stalemate in the trade war between the U.S. and China will probably hold next year. Both nations will want to maintain some stability in trade relations ahead of the midterm elections here. Vietnam, India and Thailand will make inroads in the U.S. market at China’s expense.

5) Financial regulators will be busy policing AI “autonomous agents,” artificial intelligence-powered algorithms that can already approve loans and execute trades on their own. The Securities and Exchange Commission (SEC) and the Fed will introduce new regulations requiring banks to treat their AI agents as digital employees subject to dedicated monitoring. Look for the emergence of a new role at banks, the chief AI risk officer (CAIRO), to ensure compliance.

Politics
6) Look for Democrats to take back the House from Republicans, who now hold a precariously thin margin of seven seats. The swing in power won’t be substantial, with Dems likely to hold a similarly small advantage of 10 seats at best. Despite this, the House will pour cold water on the remaining two years of President Trump’s legislative agenda, forcing him to cut deals with Democrats, a scenario he’s been able to avoid so far with the GOP in total control of Congress. But Republicans will retain control of the Senate, and may even gain a seat or two, as the political landscape favors the GOP in the upper chamber. Susan Collins of Maine is the only vulnerable GOP senator up for reelection, although Democrats are bullish that they can flip North Carolina’s open seat by running former Governor Roy Cooper. Democrats face tough fights to retain seats in Georgia and Michigan, states Trump won in 2024.

Business and investing
7) Overseas AI data centers will see a surge in development and interest. Increasingly, foreign nations and businesses want local AI computing and data. That has spurred foreign cloud computing companies to build data centers to compete with U.S. giants, such as Amazon, Microsoft and Alphabet. For example, Europe’s Stackit caters to EU privacy and data rules for domestic customers. American cloud giants will ramp up data center projects overseas, where they can find cheap power or faster permitting for power, a big constraint in the U.S. and many other places. With the demand for sovereignty over data, look for U.S. tech giants to increase partnerships with local cloud providers, especially in countries like India, the United Arab Emirates and South Africa.

8) Expect lots of stock market and business jitters around AI investment. But major tech companies won’t let up on the astronomical spending that is required to maintain leadership with leading-edge AI. Frontier AI models, as leading AI is called, require huge amounts of computing power to get better. Tech giants and start-ups don’t see any way around the spending spree for now, since it’s the only reliable way to improve AI and stay at the forefront. Even as their financing gets stretched and grows riskier, big tech firms will forge on. Expect glimmers of lower-cost AI to make investors jumpy in 2026, especially as analysts closely scrutinize the cheaper AI models coming out of China.

9) SpaceX’s IPO will be a wild ride with lots of risk to early investors. The targeted valuation — reportedly $1.5 trillion — stems from very rosy predictions for the future of the rocket and satellite broadband firm. Its Starlink internet service is poised to gross about $16 billion in 2026, and future growth could get harder. SpaceX needs fresh funding for data centers in space, a Mars mission, a moon base and more. We think space data centers are an interesting tech project, but could take a decade or more to pan out, and even then, will be small in scale.

Foreign policy
10) 2026 will see the hardest push yet for a Russia-Ukraine peace agreement. Washington badly wants one, and Kyiv clearly sees the writing on the wall, so it has moved to compromise on some important sticking points, including land, in exchange for NATO Article 5-like security guarantees from the U.S. and Europe. Moscow remains the major wild card. Russian President Vladimir Putin has so far not been willing to budge on his maximalist demands for a peace deal. If Putin does ultimately accede to a U.S.-negotiated agreement, don’t be surprised if Moscow starts making plans to reignite the conflict a few years down the line.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• The Economy on a Knife's Edge
• What to Expect from the Global Economy in 2026
• Business Costs for 2026: A Kiplinger Special Report
• The Rise of AI: A Kiplinger Special Report

The Federal Reserve’s interest rate cuts during the fall are having a ripple effect across most consumer savings rates. The federal funds rate — the rate banks use to borrow and lend to one another — recently dropped to a target range of 3.75% to 4%, the lowest level in about three years. And the consensus among economists is that rates will continue to fall modestly in 2026, perhaps by another half a percentage point or so by year-end.

The result for savers: The days of easily earning 5% or more on cash have passed, financial advisers say.

“Many people were getting used to 4% and 5% yields on short-term money, but this is quickly drifting down, to as low as 2% to 3% in some cases,” says certified financial planner Todd Calamita, president of Calamita Wealth Management in Charlotte, N.C. “Complacency can cost people thousands of dollars if they don’t keep a watchful eye on the interest their accounts are paying.”

Today’s lower savings rates, though, are still higher than cash yields have been for much of the past 15 years — 1% or less was common during the period between the Great Recession and the pandemic — and, on average, they continue to outpace inflation. So you can still earn a solid real return if you shop around.

Experts caution, however, that nabbing the best rate shouldn’t be your only consideration when it comes to storing cash. “Safety and liquidity should also guide your decision, not just yield alone,” says Bennett Gordon, a CFP with MGR Wealth Management in Boca Raton, Fla.

Here is what advisers recommend as the best short-term savings options now, depending on how quickly you might need access to your money and your tolerance for risk.

High-yield savings and money market accounts: Easy access, ironclad safety

If you want fuss-free, nearly instant access to your cash, your best bet is a high-yield savings account or a money market deposit account. Many banks and credit unions are paying about 3.5% on these federally insured accounts now, while some online banks are promoting rates of 4% or better.

Recently, for instance, Pibank was paying 4.6% on its savings account, and TIMBR was offering 4.4%.

The trade-off? In return for a better rate, you may be limited to six or fewer monthly transactions or required to meet a minimum balance, typically ranging from $25 to $2,500. Money market accounts, which offer debit card and check-writing privileges, tend to have more restrictions than high-yield savings accounts.

Before switching from your current financial institution, do the math to make sure a move is worth the hassle, Calamita says. You’ll double your payout by moving to a bank paying 4% instead of 2%, but on a $5,000 balance, that translates to only an extra $100 or so a year.

Mutual funds and ETFs: Better returns, a bit of risk

Storing short-term savings or emergency reserves in a money market mutual fund or exchange-traded fund can be a good option if you’re trying to top your bank’s rates but still want strong safeguards against losing money, or if you need diversification and added safety in an investment account, such as an IRA or 401(k).

Sold by mutual fund and investment companies, money market funds invest in high-quality short-term Treasury bills and municipal and corporate debt. While they’re not backed by the Federal Deposit Insurance Corp., they aim to maintain a stable net asset value of $1 per share.

In effect, they pledge that you’ll never lose your initial investment, says Jeremy Keil, a CFP in Milwaukee and author of Retire Today: Create Your Retirement Master Plan in 5 Simple Steps. Top payers recently included Gabelli U.S. Treasury Money Market Fund (GABXX) with a 30-day yield of 4% and DWS Government & Agency (DTGXX), paying 3.94%.

If getting a high rate on your cash is your top goal and you’re willing to accept a bit more risk, ultra-short bond ETFs are also an attractive option. Although the funds, which invest in short-term, investment-grade debt, can fluctuate in value, the shifts are typically tiny.

In 2022, when bonds generally were hammered with double-digit declines, the average ultra-short bond fund lost just 0.1%, according to Morningstar.

High-quality, top-yielding options recently included Fidelity Low Duration Bond Factor ETF (FLDR), with a 30-day yield of 4.49%, and Vanguard Ultra-Short Bond ETF (VUSB) and iShares Ultra Short Duration Bond Active ETF (ICSH), both yielding 4.25%.

For added safety, you might go with a Treasury-only ETF, such as State Street SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), recently paying 3.71%, or BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE), offering 3.64%.

“The most common mistake is comparing a high-quality money market or bond ETF with a low-quality one,” Calamita says. “The rates on the surface can often look very appealing, but there’s no free lunch. A substantially higher yield always means higher risk.”

CDs: Higher returns, delayed access

For cash you won’t need anytime soon, locking in recent yields for several months or even a year through certificates of deposit can be a smart choice, given the strong likelihood of additional rate cuts in 2026. Online banks and credit unions lately have been paying between 3% and 4% on CDs with maturities of one year or less.

Top-yielding CDs include a 13-month CD from Hyperion Bank, recently paying 4.25% (minimum opening deposit: $10,000), and a 13-month certificate from Genisys Credit Union, at 4.3% ($500 minimum).

You can find a CD term that works for you using this Bankrate tool:

These federally insured accounts, however, offer little flexibility. Most charge you a few months’ worth of interest if you remove the funds before the term ends, although some don’t. Look for ones labeled no-penalty CDs if you might need early access to your money.

The downside to CDs? If markets behave unexpectedly and interest rates begin to rise, you risk being stuck in an account paying less than other cash options. So don’t go overboard tying yourself to today’s rates.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

• Where to Store Your Cash in 2026
• Vanguard Money Market Funds: What You Need to Know
• Why a 5-Year CD is Still Your Best Bet After the Fed Meeting
• Where to Move Your Money Before the Next Fed Meeting

To help you understand what's going on in politics and the economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

2028 will mark another milestone in American history: The first presidential race since 2012 without Donald Trump on the ballot. Since becoming the GOP nominee a decade ago, Trump has reshaped both the Republican Party and U.S. politics writ large.

What do the next 10 years of U.S. politics have in store? Expect both parties to struggle in sorting out their post-Trump identities.

Republicans have an obvious heir apparent in Vice President JD Vance, though it’s unclear if he can hold together the singular Trump coalition of voters, which ranges from religious conservatives to working-class whites. Also unclear is whether Trump’s successor can continue making inroads with minority voters, particularly Latinos, who swung hard toward the GOP in recent election cycles.

Democrats must decide between moderation and populism. The party has had lots of success in the Trump era with so-called national security moms — middle-of-the-road female candidates, often with some sort of military background, who do well in formerly Republican suburban areas. But the Democratic base is increasingly keen on left-wing candidates like NYC Mayor Zohran Mamdani.

Keeping politics local remains a major challenge. National party identities have made it difficult for Republicans and Democrats to run the right candidates in the right places. This especially hurts moderates trying to win in hostile territory. Until that changes, two-party competition will only become more cutthroat, as they both vie for a diminishing number of swing states and congressional districts.

The current midterm redistricting push offers a preview of what is to come. Democrats and Republicans will squeeze every seat possible out of the states that they control, a reflection of how closely contested the House has been recently. Recent election cycles have seen smaller gains for both parties. Since 2016, the average number of House seats gained has been 14.2, vs. 27.0 the decade prior. The only wave election of the last decade was the Democrats’ 41-seat pickup in 2018.

Republicans will retain a structural advantage in the Senate, since the GOP boasts more than 40 safe seats in the chamber, much more than the Dem total. At the presidential level, expect the current list of swing states to persist for at least a couple of election cycles. Arizona, Georgia, Michigan, Nevada, Pennsylvania and Wisconsin all stand at the center of some crucial demographic divides that show no sign of going away, specifically education and race. All feature some electorally volatile combinations of college-educated suburban white voters (who have trended left in the Trump era), working-class white voters (who have trended right), and swingy minority voters.

But a single election can quickly reshuffle the political order. Democrats are hoping that sharply divided North Carolina and white whale Texas can become competitive over the next decade. Republicans, meanwhile, like the party’s odds in Minnesota, demographically similar to neighboring Wisconsin and even New Jersey, where Donald Trump had the best GOP presidential performance in nearly four decades last year. Political power will continue to shift with the population to the Sun Belt. The region has accounted for 80% of U.S. population growth over the past decade and has gained both electoral votes and House seats accordingly. That bodes well for Republicans and ups the onus on Democrats to make inroads in those states.

The issue that will most likely define the next decade in politics: Affordability. Voters are already angry about the escalating cost of living. Electricity prices are up more than 30% over the last four years. Housing prices are up more than 26%. Nominal wages, on the other hand, have increased by only 18% over the same period. Many barriers stand in the way of new housing, factories and infrastructure. Washington has so far been willing to throw money at these problems, as evidenced by the Biden-era bipartisan infrastructure bill and CHIPS Act. However, lawmakers have struggled to address various regulatory barriers to construction.

Congress faces an early test on this front with its fight over permitting reform legislation. Addressing some of these barriers is likely to become even more difficult. Take artificial intelligence. It has fueled a data center construction boom that has driven up electricity prices and sparked a political backlash in some parts of the country. For now, Washington backs the build-out, viewing AI as the future of the U.S. economy. The question is whether it will remain politically viable to do so, especially if AI also winds up having a disruptive effect on labor markets. AI will also further test America’s ability to maintain its edge over China, whose economy has proved increasingly innovative and can build at scale better than the U.S. when it comes to making consumer goods or weapons of war. Beijing has notably struggled to catch up with the U.S. in several crucial areas, including advanced semiconductors. The Chinese are pushing hard to change that.

The U.S. will struggle to maintain the remnants of its global hegemony, amid fraying relations with longtime allies and a host of adversaries who are eager to take advantage of the situation. The Trump administration is setting the tone for the next decade, pushing fellow members of the North Atlantic Treaty Organization (NATO) to spend more on defense and fend for themselves more against a hostile Russia. That raises questions about how Washington would react if China tried an invasion of Taiwan, as it has repeatedly threatened. The tiny island-nation is important to Beijing as a status symbol and as the center of semiconductor supply chains.

At the same time, Washington faces mounting fiscal pressures. Federal debt now exceeds 100% of GDP. Uncle Sam routinely runs big budget deficits. The most expensive line items: Health care programs like Medicare and Medicaid, plus Social Security, which together account for more than 40% of federal spending. Both have proved politically difficult, if not impossible, to address, and Washington has not made a serious attempt to rein in federal spending in roughly a decade.

For now, the dollar’s status protects the U.S. from the worst consequences. The greenback remains the world’s reserve currency, along with being the top choice for international payments, insulating America from the effects of its debt and deficits. Even persistent efforts by China have done little to undermine the dollar’s dominance. But if anything dents demand for dollars, Washington will face the same tough choices over spending that many of its European allies, such as the U.K. and France, do now.

These are far from the only problems that the U.S. will face going forward. Washington will continue to face tough policy choices over immigration and other issues that lawmakers have long made a habit of putting off until later. But they may be the defining ones. Gone are the days when Washington could take its place in the world for granted. Instead, there are unsettled questions, the answers to which will have a huge impact on American power and prosperity.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• What to Expect from the Global Economy This Year
• Big Change Coming to the Federal Reserve
• The U.S. Economy Will Gain Steam This Year
• Breaking China's Stranglehold on Rare Earth Elements
• The Rise of AI: A Kiplinger Special Report

The latest Consumer Price Index (CPI) report showed a modest uptick in inflation, but the data on price growth are muddied considering October figures were not collected due to the record-long government shutdown.

According to the Bureau of Labor Statistics, headline CPI was up 0.2% from September to November, slower than the 0.3% month-over-month rise seen in September and matching economists' expectations.

The CPI was 2.7% higher year over year, below September's 3.0% rise and the 3.0% increase economists anticipated.

Energy costs were a large factor behind the monthly increase in headline CPI, according to the BLS, improving 1.1% from September to November. Food costs were also on the rise, up 0.1%.

Other areas that saw price increases over the two-month period included household furnishings and personal care, while lodging away from home, recreation and apparel saw prices edge down.

Core CPI, which excludes volatile food and energy prices and is considered a more accurate measure of underlying inflation trends, increased 0.2% from September to November and rose 2.6% compared to the same period last year. In September, core CPI was 0.2% higher month over month and 3.0% year over year.

"Today's low inflation reading won't move the needle for the Fed given how noisy the data is," says Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management.

The absence of October data makes monthly comparisons "impossible," Haigh adds. "The Fed will instead focus on the December CPI released in mid-January, just two weeks before its next meeting, as a more accurate bellwether for inflation."

Indeed, rate-cut expectations have changed little following the delayed release of the November CPI. According to CME FedWatch, futures traders are pricing in a 71% chance the Fed will keep interest rates unchanged at its January meeting. Odds for a March rate cut are currently at 46%.

That said, with the November CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the November CPI report

"November CPI coming in weaker than expectations may keep the Federal Reserve on hold for the foreseeable future when it comes to any interest rate decisions. We likely have seen the last interest rate move last week from Chairman Powell's Fed as they now take a pause to assess if the inflation picture continues to improve and if employment continues to weaken." – Skyler Weinand, Chief Investment Officer at Regan Capital

"The steady downtrend in shelter costs is starting to bring down core inflation. This is good news for the Fed because shelter is the biggest category in overall inflation. The disinflationary trend may continue this month because oil has dropped and home prices are still under pressure. This is a relief for people worried about a hawkish start to the year. A Santa Rally could still be in the cards." – David Russell, Global Head of Market Strategy at TradeStation

"It always sounds smarter to predict trouble ahead, but this morning's inflation data was much better than expected. Of course, it's only one month's data points and they will likely fluctuate in the upcoming months, but the main concern of Fed officials who are reluctant to keep cutting is that inflation is persistently high and won't come down if they keep lowering interest rates, and at this point, that doesn't look like it's the case." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"Some caution is warranted in interpreting the topline inflation readings. The all-important shelter component was unusually weak in the two months leading into November, which may be more noise than signal due to the disruptions from the shutdown. That said, core goods inflation, which is at the epicenter of the tariff passthrough process, seems to have peaked, for now. Elsewhere, food and energy prices matter a lot of consumers' psychology, and though utilities costs are up appreciably, households are benefiting from minimal pump price growth." – Bernard Yaros, Lead Economist at Oxford Economics

"Today's CPI shows disinflation not just holding, but gathering rhythm — a reminder that prices can still move in the right direction, even when the details get noisy." – Gargi Pal Chaudhuri, Chief Investment and Portfolio Strategist at BlackRock

"Our take is that underlying inflation remains better behaved than we anticipated in late 2025, though we believe several more months of data — beyond the distorted government shutdown period — will be needed to confirm what is a remarkable improvement. At the least, this report adds to our conviction that the buildup of tariff-related inflation should prove limited." – Jennifer Timmerman, Senior Investment Strategy Analyst at Wells Fargo Investment Institute

""Inflation still feels high to many households because prices have moved up in levels, not just rates, and tariffs are contributing to that experience. Even as year-over-year inflation has cooled, households are facing higher baseline prices for goods, as companies have only recently (within the past few months) begun passing along tariff-related costs to end consumers. Tariffs may or may not cause sustained inflation, depending on timing, policy, and broader conditions. But the impact is ultimately psychological: higher prices, once in place, are felt continuously, even if inflation is no longer accelerating. That ongoing exposure is what keeps inflation feeling high for many households, despite cooling headline numbers. But even if prices for essential goods only go up for a while and then stabilize, if your wages haven't gone up accordingly, the effect leaves people with less acquisitive power." – Katie Klingensmith, Chief Investment Strategist at Edelman Financial Engines

Related content

• The End of 2%? An Investment Adviser's Case for Why the Fed Should Raise Its Inflation Target
• When Is the Next Fed Meeting?
• Kick Your Cash Off the Couch: Here's How to Prevent Inflation From Eating Your Savings
• An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your Retirement

The November jobs report, delayed from its initial December 5 release date due to the record-long government shutdown, came in higher than expected but showed the labor market continuing to exhibit signs of weakness.

According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by 64,000 in November, beating economists' estimate for 45,000 new jobs. The report also showed 105,000 job losses for October, while figures for August were revised down by 22,000, from -4,000 to -26,000, and September's additions were revised lower by 11,000, from +119,000 to +108,000.

These revisions result in 33,000 fewer jobs combined in August and September than previously reported.

As for November, job gains were seen in health care (adding 46,000) and construction (adding 28,000). However, federal government jobs declined by 4,000 in November and 162,000 in October, and are now down by 271,000 since January. The October federal job losses came as those who accepted a deferred resignation offer were removed from payrolls.

The data does not count furloughed federal employees because they received pay.

The unemployment rate, which is calculated from a separate survey, rose to 4.6% from 4.4% in September – its highest level in more than four years. The data also showed that wage growth was 0.1% higher compared to September and up 3.5% year over year.

"The October and November payroll releases set a modestly dovish tone for U.S. monetary policy in 2026," says Jeff Schulze, head of Economic and Market Strategy at ClearBridge Investments. "The rise in the unemployment rate is something to keep an eye on and will keep the hopes of another cut alive in the first quarter since labor slack appears to be gradually building."

According to CME Group's FedWatch, futures traders are now pricing in a 73% chance the Fed will keep interest rates unchanged when it meets in January. Odds are at 45% that the central bank will cut rates by a quarter-percentage point in March.

But as Chair Powell said during the December Fed meeting, "we're going to have to look at [the data] carefully and with a somewhat skeptical eye," because it may be “distorted by very technical factors.”

With the November jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the November jobs report and what it means for the Fed

"This softer jobs picture reinforces the view that the labor market is no barrier to further Fed easing. The Fed has already signaled patience after its recent rate cut and emphasized downside risks in employment. Futures markets are pricing in continued rate cuts in 2026, and a softer labor backdrop could bring some of those cuts forward if inflation also cools." – Daniela Hathorn, Senior Market Analyst at Capital.com

"The Fed is unlikely to put much weight on today's report given data disruptions. Chair Powell commented last week that the report would likely be affected by shutdown-related distortions, making it a less reliable gauge of the labor market's health than usual. The report on December's employment data, released in early January ahead of the next meeting, will likely be a much more meaningful indicator for the Fed when it comes to deciding the near-term policy trajectory." – Kay Haigh, Global Co-Head of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management

"Today's report may assuage some fears that the labor market is cooling too rapidly. Between September's jobs data warranting healthy skepticism due to delays and self-reporting, October's data nearly being lost, and month-over-month downward revisions, we're continuing to watch for steadiness and consistency before agreeing that there been a truly 'strong' jobs report." – Jerry Tempelman, Former Senior Analyst at the NY Fed and VP of Fixed Income Research at Mutual of America Capital Management

"November NFP at +64k, slightly above +50k consensus, continues the general downtrend in job growth without signaling new recession risks. This print alone shouldn't meaningfully shift expectations for the path of Fed cuts, nor is it low enough to create new downward pressure on risk assets. While October NFP was much lower, at -105k, government payrolls were the discorporate contributor, as widely expected, and private payrolls stayed positive which makes the October headline less concerning." – Adam Hetts, Global Head of Multi-Asset and Portfolio Manager at Janus Henderson Investors

"Taken at face value, the unemployment rate has crept up, but this data is particularly messy for November and should be taken with a grain of salt. The BLS had to make several adjustments to their typical processes in order to account for the government shutdown, all of which add up to less precise estimates, particularly in the part of the jobs report that surveys households. There’s little doubt the labor market is cooling, even after accounting for these nuances in the October and November data. The current job market is not very welcoming to job seekers, with new jobs and overall hiring subdued." – Elizabeth Renter, Senior Economist at NerdWallet

"After months of anticipation for official government employment data, consensus market forecasts proved remarkably accurate. Bond bears likely will point to the continued strength in private payroll growth, while bond bulls will highlight the modest uptick in the unemployment rate, which reached the highest level in over a decade, driven by reentrants. Overall, the report contains enough softness to justify prior rate cuts, but it offers little support for significantly deeper easing ahead. With labor market signals sending mixed messages, the next inflation reading may become the primary driver for markets as we enter the new year." – Kevin O'Neil, Associate Portfolio Manager & Senior Research Analyst at Brandywine Global

Related content

• Kiplinger's Economic Calendar for This Week
• Earnings Calendar and Analysis for This Week
• When Is the Next Fed Meeting?
• 6 Quick Money Moves to Make Before the Year Ends
• Best Stocks to Buy for Fed Rate Cuts

To help you understand what is going on in the global economy and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

After a year of tariffs and policy shocks, 2026 will be pivotal for the global economy. Can the post-pandemic economy grow sustainably if the geopolitical environment calms down a bit? Expect a year that is anything but dull for markets, as rapid artificial intelligence investment and adoption continue to dominate investor sentiment and trades.

Look for a “soft landing” for global growth, as world GDP rises by 2.8%, vs. 3% in 2025. Volatility will be the norm, driven by an economy often called “K-shaped,” where winners and losers drift further apart. Here is who will be up and down:

The U.S. economy will face a tug-of-war between a booming tech sector and the cooling job market. High-income households, buoyed by the stock market, will keep spending. Middle- and lower-income folks will pull back as the labor market softens. Spending on AI will prop up business investment and GDP. But if the “productivity boom” doesn’t materialize soon, fears of an AI bubble could upend global markets.

Europe’s economy looks sluggish right now. But Germany is positioned for a big rebound. Expect eurozone growth of just 1.1%, but momentum will build toward year-end. Germany will perk up to around 1.5% growth, driven by massive fiscal stimulus and defense spending. Political uncertainty and strained budgets will put a damper on growth in France. The U.K. economy will shift to a lower gear with growth slowing, as domestic headwinds such as a cooling labor market follow this year’s trade shocks.

India will be the star performer in Asia next year. Expect growth of 6.4%, powered by domestic consumption as its massive middle class gains spending power. India will surpass Japan to become the world’s fourth-largest economy next year.

China will continue to decelerate, slowing to 4.5% growth. Beijing aims to curb deflation with its “anti-involution” to stop cutthroat price competition, but the property sector remains a drag. By contrast, Japan faces a tough balancing act of supporting steady but unspectacular growth while battling sticky inflation.

Growth in Latin America is set to slow down, as lower commodity prices, trade disputes and budget tightening weigh on most of the region’s economies. Interest rates likely won’t fall as much as investors are hoping. The Fed will cut, but not deeply. The European Central Bank will stay on hold, as inflation undershoots briefly in early 2026 before normalizing. Rates in the EU will likely remain at 2.0% through the year. The Bank of England will cut rates at least once in 2026. The Bank of Japan will be one of the few central banks hiking rates next year.

The greenback will likely weaken by around 6% against major trade partners by year-end, as the Fed cuts rates. But it won’t crash. The buck’s role as a safe haven will keep a floor under it, especially whenever geopolitical tensions flare up again.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related Stories

• AI Start-ups Are Rolling in Cash
• How Tariffs Impact Your Wallet
• After Years of Stagnant Growth, Hope Emerges for E.U. Economy

The December Fed meeting concluded on December 10, with the central bank issuing its third straight quarter-point rate cut.

The central bank also released its Summary of Economic Projections, or dot plot, which remained more or less the same from September, but gave more optimistic outlooks for the economy and inflation.

"Powell got out his three wood and hit it right done the middle," says Ryan Detrick, chief market strategist at Carson Group. "The market got the cut it wanted and although a January cut isn't the base case, by no means did they put cold water on that potential move. Then the cherry on top was a stronger forecasted economy next year, never something we'd consider a bad thing."

The Kiplinger team reported live on the December Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy. Scroll for all the updates.

Best Stocks to Buy for Fed Rate Cuts | Falling Interest Rates: What They Mean for Homeowners, Savers and Investors | What's Next for the Fed — as an Institution?

Fed meeting schedule for 2026

The next Fed meeting, which runs from December 9 to December 10, marks the final gathering of 2025. Looking ahead to 2026, the Federal Open Market Committee will hold its first meeting of the new year on January 27 to 28.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full Fed meeting schedule for 2026:

• January 27 to 28
• March 17 to 18
• April 28 to 29
• June 16 to 17
• July 28 to 29
• September 15 to 16
• October 27 to 28
• December 8 to 9

- Karee Venema

Who gets to vote at the December Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Stephen Miran
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve. Additionally, Jerome Powell's term as Fed chair is up in May.

- Karee Venema

How can you invest for lower interest rates?

With the Federal Reserve expected to cut rates at its final meeting of 2025, many investors may be wondering how they can prepare their portfolios.

One way is to seek out high-quality growth stocks, which tend to see outsize benefits from lower interest rates.

This happens for two reasons, says Kiplinger contributor Charles Lewis Sizemore, CFA. For one, lower rates make capital cheaper and "young, fast-growing companies often rely on external funding."

Additionally, lower interest rates boost the current value of future profits, which increases valuations for firms with long-term earnings potential.

Read more: How to Invest for Fall Rate Cuts by the Fed

Markets are optimistic about a rate cut

Equity index futures pointed to a higher open for Fed Week Monday morning, following through on solid gains for the first week of December. The S&P 500 closed higher for a fourth straight session and its ninth out of 10 on Friday.

"The stock market may have bounced back strongly from its November pullback," E*TRADE Managing Director Chris Larkin observes, "but a new up leg to its rally is still a work in progress."

According to Larkin, what the FOMC does and Federal Reserve Chair Jerome Powell say on Wednesday "will likely determine whether the S&P 500’s October record highs turn out to be genuine resistance level or just the latest notch on the bull market’s belt."

FedWatch shows a near-90% probability the FOMC will cut the target range for the federal funds rate by another 25 basis points, following similar moves in September and October. As Larkin notes, recent incoming economic data highlight both "ongoing labor-market softness and sticky inflation.

So lower interest rates at this meeting "might not be a slam dunk" despite market optimism. "As is often the case, though," Larkin concludes, "Chair Powell’s press conference could play a big role in shaping the market’s short-term response."

– David Dittman

The Fed's windshield is foggy

The three main U.S. equity indexes turned negative less than an hour into Monday's trading session as investors continue to process incoming data from the economic calendar.

The S&P 500 was down about 0.2% a little more than 50 minutes after the opening bell but remained within 0.5% of its October 28 record closing high of 6,890.89. The Dow Jones Industrial Average was off 0.3%, and the Nasdaq Composite was down 0.1%.

We should probably expect a little intraday up-and-down this week, which will still amount to not much compared to movement in expectations around what the Fed will do this week.

FedWatch has been all over the place amid unprecedented data-blindness due to a record-long government shutdown. Today, it shows a near 90% probability of a 25-basis-point rate cut.

As recently as November 19 markets were about 70% certain the FOMC would hold the target range for the federal funds rate at 3.75% to 4.00% after cutting at its September and October meetings.

“To my knowledge, it’s totally unprecedented,” Peterson Institute of International Economics Senior Fellow David Wilcox told Quartz.

Wilcox said the present situation is "off the charts" and compared the Fed to a person driving with a foggy windshield.

– David Dittman

For whom the Fed bids

As Bloomberg's Joe Weisenthal notes, nobody cares about the independence of the U.S. central bank amid lingering questions about what's next for the Fed as an institution during President Donald Trump's second run in the White House.

The White House has already openly discussed whether it would fire Fed Chair Jerome Powell as it lobbied for lower interest rates through most of 2025. And there's a pending Supreme Court case that will resolve Gov. Lisa Cook's future on the Fed's board.

"There's a ton of talk on Wall Street and in the media that Fed independence is at risk of going away," Weisenthal observes. "That is definitely a valid concern."

He cites Trump's public criticism of the FOMC and the fact that the president named the chair of his own Council of Economic Advisors to fill a recent vacancy on the board.

And Trump will soon name a successor to Powell: "One likely candidate is Kevin Hassett, and there is a fear that Hassett will be there to do Trump's bidding, rather than assiduously pursue the Fed's dual mandate."

At the same time: "There's not much evidence that this is a real concern in the market right now." Weisenthal quotes Standard Chartered macro strategist Steve Englander at length but the bottom line is right here:

"Questions have been raised about Kevin Hassett’s credibility with markets and within the FOMC," Englander writes, "but the questions are not showing up so far in inflation breakevens, which are close to post-2024 election lows."

As Englander explains, "If Hassett as Federal Reserve Board Chair is expected to compromise inflation outcomes, this is where we would expect to see these concerns most clearly."

– David Dittman

The first half of the first day of Fed Week

There's a split among the "bullish" sectors – communication services, financial stocks, industrials and technology stocks – in the first half of Monday's trading session. The first two are in the red, the other two are in the green.

And all three main U.S. equity indexes have stabilized with modest losses of 0.2% to 0.3%.

Action in the bond market is similarly stable, with the yield on the 2-year U.S. Treasury note up to 3.602% from 3.564% on Friday. The 10-year U.S. Treasury yield is up to 4.178% from 4.139%, the 30-year from 4.822% from 4.792%.

FedWatch shows the probability of a 25-basis-point rate cut has dipped from 89.9% to 87.6%.

What's moving markets while we're watching the Fed? Probably Netflix (NFLX), which faces a hostile challenge from Paramount Skydance (PSKY) as it tries to complete its next eyeball-catching expansion with the acquisition of Warner Bros. Discover (WBD).

NFLX, a leader among communication services stocks, is down more than 4% as of midday Monday. The stock recently split 10 for 1.

Tech stocks were up but off their highs after International Business Machines (IBM) announced an $11 billion deal to acquire data-infrastructure firm Confluent (CFLT), as markets continue to ask whether we're in an AI bubble.

– David Dittman

The Supreme Court and the Federal Reserve

The Supreme Court is hearing oral arguments today in a case many observers consider a preview of the upcoming matter of whether President Donald Trump can fire Fed Governor Lisa Cook.

The White House is asking the high court to overturn a precedent established in a 1935 case, Humphrey's Executor v. United States, that limits presidential authority to remove the heads of independent agencies.

As Reuters reports, during today's questioning Associate Justice Brett Kavanaugh asked Solicitor General D. John Sauer, arguing on behalf of President Trump, about implications for the U.S. central bank.

"How would you distinguish the Federal Reserve from agencies such as the Federal Trade Commission?" Justice Kavanaugh asked. The Supreme Court will hear arguments on Trump's attempt to fire Cook on January 21.

In May, the Court issued an opinion suggesting at least six justices would rule against the president. It did not explicitly overrule Humphrey's Executor, but it did allow him to fire two members of other federal agencies' boards.

And the Court offered a two-sentence summary on the question it will begin to answer next month.

"Finally," the six-member majority wrote in an unsigned opinion, "respondents Gwynne Wilcox and Cathy Harris contend that arguments in this case necessarily implicate the constitutionality of for-cause removal protections for members of the Federal Reserve's Board of Governors or other members of the Federal Open Market Committee.

"We disagree. The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

– David Dittman

Does Gen Z even care about the Fed?

In its most romantic guise it's the foundation of a whole new financial system where things like the next Fed meeting simply don't matter. In more prosaic terms what cryptocurrency is and how bitcoin works boil down to digital money.

At the same time, young people recognize what's happening here: crypto is growing and maturing. More evidence comes from an October 2025 YouGov survey surfaced by Marketwatch.com today.

According to YouGov (pdf), 26% of young men own cryptocurrency, and 28% own any crypto-based asset such as individual tokens and/or coins, crypto-based ETFs, or both. Meanwhile, 21% say they have a 401(k), Roth IRA or similar retirement fund. And 24% say they hold individual stocks.

This is consistent with similar findings from YouGov reported by Fortune in February: "Gen Z investors are four times more likely to own crypto than retirement accounts."

To be clear, these are the crypto trends we're watching in 2026.

– David Dittman

Certainty, uncertainty and the Fed

The three main U.S. equity indexes continued to head lower Monday afternoon amid rising volatility (as measured by the market's "fear index") and a lot of known unknowns.

"The uncertainty of the nature of the Fed cut expected this Wednesday has put the market in a wait-and-see mode," Louis Navellier of Navellier & Associates observes.

That 87.4% (and falling, if ever so slightly) probability is "clouded by the expectations that the cut will be highly contentious internally and whether the rhetoric will be hawkish enough to bring serious doubts about any further cuts until Chairman Powell is replaced in May."

Navellier notes as well that absence "of complete economic data due to the catch-up from the extended government shutdown also makes reaching conclusions difficult."

He says too that a developing "trend in interest rates is becoming more challenging," highlighting the move in the 2-year U.S. and the 10-year U.S. government yields to their highest levels in more than a month and since March, respectively.

"The VIX had dropped to 15.3 premarket, the lowest in three months," Navellier adds, "and has jumped back to 16.8 in an apparent caution over the upcoming Fed cut."

While the trend remains cautiously positive, he concludes, uncertainty will continue until after Wednesday's FOMC decision and commentary from the outgoing Fed chair.

– David Dittman

About the Fed's data deficit

Much is being made of the economic data deficit the longest government shutdown in the history of the United States has created for the Federal Reserve.

A lot of the ups and downs for expectations about what our central bankers will do with the federal funds rate have been fueled by the absence of information about jobs and inflation.

Now imagine a world where data about the holdings of the biggest investors, traders and speculators on the planet across the full spectrum of financial assets – including buy and sell transactions – is available in real time.

Among the crypto trends we're watching in 2026 is "integration and convergence": where "TradFi" and "DeFi" combine to make things more efficient for everyone.

OK, look, yes, we're not contemplating real-time Consumer Price Index (CPI) data (the dream is, of course, PCE…).

But at least some market participants were limited by the delay in commitment of traders reports from the Commodity Futures Trading Commission.

And the fast-growing and rapidly maturing crypto industry shows us how to solve problems like that, for the long term.

– David Dittman

Does the Fed need to think about deflation?

"This week will be all about the Federal Open Market Committee (FOMC) statement on Wednesday," Louis Navellier of Navellier & Associates says. Still, there are notable names on the earnings calendar, including Oracle (ORCL, +1.4%) and Broadcom (AVGO, +2.8%).

Navellier doesn't expect the FOMC to signal more cuts to interest rates in its post-meeting statement "no matter what their dot plot signals" because voting members remain "very uncomfortable with the delay in economic data from the federal government shutdown."

At the same time, the Fed must cut the target range for the federal funds rate two more times – in addition to a 25-basis-point move this week – "and move to a 'neutral' rate."

According to Navellier, "The inflation risk has fizzled, and due to falling home prices, excess rental properties, and falling crude oil prices, if anything, there is a potential deflation risk that the Fed must consider."

As of Monday's closing bell, FedWatch shows an 89.4% probability of a quarter-point rate cut at the conclusion of this week's FOMC meeting.

And we'll be there all the way through to the other side of Fed Chair Jerome Powell's press conference.

– David Dittman

Stocks start Fed Week on a negative note

Stocks trended lower throughout Monday's session as caution set in ahead of the December Fed meeting. The central bank is widely expected to announce its third straight quarter-point rate cut Wednesday afternoon. However, uncertainty remains about what's in store for interest rates and the economy in 2026.

"This week's FOMC decision could set the tone for the remainder of 2025 and beyond, shaping expectations for monetary policy, risk appetite, and market leadership," says Mark Hackett, chief market strategist at Nationwide.

Another rate cut "would reinforce the narrative of easing financial conditions," while "any deviation from the expected path, or hawkish commentary, could recalibrate positioning and volatility as investors reassess the Fed's resolve," Hackett adds.

At today's close, the blue-chip Dow Jones Industrial Average fell 0.5% to 47,739, the broader S&P 500 slipped 0.4% to 6,846, and the tech-heavy Nasdaq Composite shed 0.1% to 23,545.

Read more: Stocks Slip to Start Fed Week: Stock Market Today

Four rate cuts in the next 12 months?

Scott Helfstein, head of investment strategy at Global X, says it's not out of the realm of possibility for the Federal Reserve to cut rates up to four times over the next 12 months.

"Simply put, real rates, or Fed funds minus inflation, is too high," explains Helfstein. "That will ultimately drive the Fed in the coming meetings. Powell noted that inflation ex-tariffs was much closer to target than the headline number and risks to the employment mandate are rising."

As such, the Fed is expected to cut rates this week and Chair Powell will likely warn that future rate cuts are no guarantee. "This really should not be surprising nor trigger a market move, but it might," says the strategist. "They are going to be data dependent, and as of now, data favors lower rates."

The bottom line, he points out, is that the Fed appears to be on a slow, sustained path toward lower rates. This and strong earnings will likely keep the wind in the stock market's sail.

Looking ahead to 2026, Helfstein believes tech stocks will continue to perform well, but a broader rotation will benefit infrastructure and industrial stocks, as well as utilities.

- Karee Venema

Stock futures signal a lower start on Tuesday

Stock futures are trading cautiously lower ahead of Tuesday's open. At last check, futures on the Dow Jones Industrial Average and S&P 500 are down 0.1%, while the Nasdaq-100 is off 0.2%.

As for single stocks, Nvidia (NVDA) is up 0.3% in electronic trading after President Trump said the tech giant could sell its H200 AI chips to China in exchange for the U.S. receiving a 25% cut of the sales.

And alternative asset management firm Ares Management (ARES) is nearly 8% higher on news it will replace snack maker Kellanova (K), which Mars is acquiring, in the S&P 500, effective ahead of the December 11 open.

- Karee Venema

What is the greater risk to the economy: inflation or the labor market?

The Federal Reserve has spent the past several months trying to balance sticky inflation with signs of a major slowdown in the labor market, says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.

This isn't anything new, he adds. Remember, the Fed has a dual mandate, as established by a 1977 amendment to the Federal Reserve Act, of maximum employment and stable prices.

But more recently, it's been an even tougher challenge.

Why? For one, says Schutte, there's less information available. Even "before the government shutdown, conflicting indicators of persistent inflation posed by tariffs versus a softening labor market and robust economic growth had already muddied the long-term economic outlook," he notes.

Additionally, economic divides have widened in recent years due to higher interest rates. Schutte says growth in areas that are sensitive to interest rates, including manufacturing and housing, has slowed, while higher-income investors have benefited.

This "K-shaped" economy makes "the Fed's job harder, as a policy that boosts one group may inadvertently drag down the other," Schutte explains. So, while the central bank is expected to cut rates by a quarter-percentage point this week, he believes there will likely be dissent among committee members.

- Karee Venema

Related: Kiplinger Jobs Outlook: A Good September Report Hides Ongoing Weakness

Who appointed Jerome Powell as Fed chair?

Jerome Powell assumed the role of Fed chair on February 5, 2018, after being nominated by then-President Donald Trump, who was serving his first term in the White House.

Powell's initial four-year stint as head of the Federal Reserve ended in 2022, but he was reappointed for a second four-year term on May 23, 2022, after being nominated by then-President Joe Biden.

Powell initially joined the Fed's Board of Governors in 2012 after he was nominated by then-President Barack Obama.

While Powell's second term as Fed chair will expire in May 2026, he can remain on the Fed's board until January 2028.

- Karee Venema

Job openings were unchanged in October

The Fed got its last labor market update ahead of tomorrow's policy announcement with this morning's release of the Job Openings and Labor Turnover Survey (JOLTS).

According to the Bureau of Labor Statistics, there were 7.67 million job openings in October, a tick higher than the 7.658 million job openings in September.

Total separations, which include quits, layoffs and discharges, slipped to 5.05 million from 5.264 million, as did hires (to 5.149 million from 5.367 million).

"The labor market is holding on, though it remains fairly unfriendly to job seekers," says Elizabeth Renter, senior economist at NerdWallet. "When employers aren't hiring, it makes it difficult for those without work, but also those who could otherwise move on from their current jobs to better opportunities."

The stagnation in both hiring and quits isn't great for the economy, she says, "but it's not bad enough to cause alarm. A more dramatic pullback in hiring could push the unemployment rate up, as could significant layoffs, but we're not seeing either of those in the data, yet."

- Karee Venema

Time to review your portfolio as the Fed lowers rates

No matter how you feel about the Federal Reserve's rate-cutting campaign, it's important to prepare your portfolio for lower interest rates, says Anne Kates Smith, executive editor of Kiplinger Personal Finance magazine.

"The good news for investors is that lower interest rates are largely positive for stocks — even in the second year of a rate-cutting cycle," she writes. Real estate, financials, tech and health care are among the sectors that tend to perform well in the second year of rate cuts, while mid- and small-cap stocks offer attractive options as well.

- Karee Venema

Read more: How to Position Your Portfolio for Lower Interest Rates

Will the Fed cut rates in December?

The Federal Reserve is widely expected to cut interest rates at its December 9-10 meeting as inflation holds steady and downside risks to the labor market remain.

As of December 9, CME Group FedWatch showed futures traders are pricing in an 89.6% probability the FOMC will lower the federal funds rate by 25 basis points (0.25%) to a range of 3.50% to 3.75%. This would mark its lowest level since September 2022.

- Karee Venema

Should you open a CD ahead of the Fed announcement?

Demand for certificates of deposit (CDs) has been on the rise in recent years, thanks to elevated interest rates, which weighed on stock market returns and had investors seeking out less-risky options.

With the Fed expected to cut rates again tomorrow, now could be an ideal time to lock in attractive yields on CDs.

The difference in yields on short-term and long-term CDs is minimal at the moment, so if you do decide to open a certificate of deposit, your choice between the two could rest with how long you're able to lock up your cash.

Remember that when putting your money into certificates of deposit, you're unable to access it until the CD matures. If you do withdraw funds ahead of time, you'll be charged a fee.

Read more: Should You Get a Long-Term or Short-Term CD Before the Next Fed Meeting?

The policy path for 2026 remains uncertain, says Raymond James CIO

The Fed will wrap up its final meeting of 2025 tomorrow afternoon and Wall Street is widely expecting the central bank to cut rates for a third straight time.

But just "beneath this near certainty lies an unusual public split within the Federal Open Market Committee," says Larry Adam, chief investment officer at Raymond James. "Recent dissents highlight the challenge of balancing a cooling job market against stubborn inflation – casting fresh uncertainty over the policy path for 2026."

And the end of Jerome Powell's term as Fed chair in May adds intrigue to the rate-cut debate. National Economic Council director Kevin Hassett, who is the frontrunner to replace Powell, said during a Wall Street Journal CEO Council event on Tuesday that "there's plenty of room" to cut rates moving forward "if the data suggests we could do it."

For now, Wall Street will have to rely on the FOMC's Summary of Economic Projections, or "dot plot", to see where committee members expect the federal funds rate to be at the end of 2026.

In September, the dot plot revealed median expectations for just one quarter-point rate cut in 2026, following three in 2025. "We don't anticipate major changes to that median view, but the growing gap between market pricing and the Fed's expected rate path is a risk worth watching," says Adam.

- Karee Venema

How well do you know the Fed?

Fed meetings have become key events on Wall Street after inflation hit a pandemic-induced 40-year peak in 2022 – which forced the central bank into an aggressive rate-hiking campaign that lifted the federal funds rate to its highest level in more than two decades.

But how well do you know the Fed?

With the next Fed announcement on deck, we decided to test your basic knowledge of the Federal Reserve and how its actions impact you and your money.

Quiz: How Well Do You Know the Fed?

A reality check on fixed income and Fed rate cuts

"What does the Federal Reserve's rate-reduction initiative mean in the short run for your fixed-income holdings?," asks Jeffrey Kosnett, editor of Kiplinger Investing for Income.

If past is precedent, some short-term upheaval. After the Fed cut rates by one full percentage point in late 2024, "the year ended with bond markets and fund returns in retreat," says Kosnett. And with sticky inflation and a weak dollar, "there is no sign of fading economic momentum to the degree that traditionally provokes big flows into Treasury bonds and forces those yields down."

Still, investors should hang tight, Kosnett advises, and seek out potential opportunities in places such as non-traditional bond funds and municipal bonds.

- Karee Venema

Read more: What Fed Rate Cuts Mean For Fixed-Income Investors

Another near certainty on Wednesday: Powell's purple tie

The odds of a December rate cut are high. It's also a near-certainty that Fed Chair Powell will be wearing a purple tie during Wednesday's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

Small caps outperformed on Tuesday

Stocks were choppy Tuesday, with market participants in wait-and-see mode ahead of tomorrow's policy announcement from the Federal Reserve. With the central bank widely expected to cut interest rates again, rate-sensitive small caps outperformed and the Russell 2000 hit a new intraday high.

The small-cap benchmark fell short of a new record close, though, gaining 0.2% to 2,526. The tech-heavy Nasdaq Composite (+0.1% at 23,576) also finished in positive territory, while the broader S&P 500 (-0.09% at 6,840) and the blue-chip Dow Jones Industrial Average (-0.4% at 47,560) ended in the red.

Read more: JPMorgan's Drop Drags on the Dow: Stock Market Today

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time today, December 10.

"Available indicators suggest that economic activity has been expanding at a moderate pace, the committee wrote in its October statement. "Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated."

As such, the FOMC voted to lower the federal funds rate by a quarter-percentage point to a range of 3.75% to 4.00%.

This time around, Goldman Sachs economists say the statement "will likely borrow the 'extent and timing of additional adjustments' language used in December 2024 under quite similar circumstances to convey that the bar for any further cuts will be somewhat higher."

They also expect more dissents than at the October Fed meeting, where Fed Governor Stephen Miran supported a half-percentage point cut and Kansas City Fed President Jeffrey Schmid supported a pause.

The economists say one other committee member could join Schmid in voting to keep rates unchanged at this meeting and believe that up to five central bankers could issue soft dissents on the Fed's monetary policy choices for this year.

What's a soft dissent? The Fed's December meetings allow all committee members to " tell you what they thought was appropriate policy for the year that just ended," explains Nick Timiraos of The Wall Street Journal. "In other words, do they agree with what just happened? Most years, this is a formality — everyone writes down whatever rate the committee settled on. But when it isn't, you get something fascinating: soft dissents. Officials who didn't vote against the decision (or weren't even voting members) quietly register that they would have done something different. "

"Dissents might actually be somewhat helpful to Powell in getting across that the bar for another rate cut will be higher," Goldman Sachs economists write.

- Karee Venema

Stock futures signal a quiet open on Fed Day

Stock futures are little changed Wednesday as Wall Street awaits this afternoon's policy announcement from the Federal Reserve. At last check, futures on the Dow Jones Industrial Average and S&P 500 were up slightly, while the Nasdaq-100 was signaling a lower open.

There is some notable price action among individual stocks, though. Braze (BRZE) is 16% higher in pre-market trading after the consumer engagement platform reported a fiscal third-quarter revenue beat. And Cracker Barrel Old Country Store (CBRL) is down nearly 4% after the restaurant chain's fiscal first-quarter top-line miss.

- Karee Venema

Trump to conduct final interviews with potential Powell replacements

President Donald Trump said he will begin the final interviews with the top candidates to replace Jerome Powell as Fed chair.

While Kevin Hassett, director of the National Economic Council, is widely believed to be the frontrunner, media reports suggest Trump and his team will meet today with Kevin Warsh, who served as a Fed governor from 2006 through 2011.

On Tuesday, Trump told POLITICO that he would only choose someone to replace Powell who is committed to cutting interest rates.

- Karee Venema

When does Jerome Powell's term as Fed chair end?

President Trump has not been subtle in his dislike of Fed Chair Powell. But the question of whether or not Trump can fire Powell has quieted down in recent months, given that the Fed chair's term is up on May 15, 2026.

Christian Hoffmann, head of fixed income at Thornburg Investment Management, says there likely won't be any surprises at the December meeting, but notes that "the biggest thing happening in the background is the question of who will lead the Fed."

He expects Fed Chair Powell to become "a lame duck fairly quickly," with whoever is chosen to replace him to become somewhat of a "shadow Fed chair ... offering opinions or taking potshots from the sidelines."

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

Labor costs rise at a slower-than-expected pace in Q3

The Federal Reserve was dealt a small inflation win this morning.

Ahead of the open, the Bureau of Labor Statistics said the Employment Cost Index (ECI), which measures labor costs, rose 0.8% from Q2 to Q3. The shutdown-delayed data came in below economists' estimate for a 0.9% increase.

Year over year, the ECI was up 3.5%.

The report shows that "the labor market is not a source of excess inflationary pressure at present," says Wells Fargo Senior Economist Sarah House. But the data "offered additional evidence that the gradual softening in the labor market is translating to slower compensation growth."

- Karee Venema

The December rate cut will be a hawkish one, says SWBC CIO

Chris Brigati, chief investment officer at SWBC, believes today's rate cut will be a hawkish one.

"The Fed is divided on how to proceed with rate cuts in 2026 given the delicate balance between job market weakness and still elevated inflation," says Brigati. "There is also uncertainty about the new Fed chair, and that may also add to the central bank's reluctance to make any major rate moves in the months leading up to Chair Powell's term ending."

As such, the central bank is unlikely to signal any additional rate cuts for early 2026. And Brigati thinks the Fed will keep interest rates unchanged in the first half of 2026, even amid pressure from doves, including Powell's eventual successor.

"We remain concerned about a potential inflation resurgence," explains the CIO. "Price data has stayed stubbornly high, consumer spending — particularly among higher-income households — shows little sign of slowing, and a more accommodative Fed stance to counter labor market weakness could reignite demand and add inflationary pressure."

Investors need to "stay alert," Brigati advises, and continue to rebalance portfolios following this year's strong showing from tech stocks. He says investors shouldn't abandon these high-growth stocks; rather, they need to develop a strategy "to cushion against volatility and position for opportunity."

- Karee Venema

Where have all the Fed speakers been?

The Fed-speak has been nonexistent over the past week or so. That's by design. Since Saturday, November 29, and until Thursday, December 11, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s. It was formalized in 2011 and reaffirmed in January 2025.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2027.

- David Dittman

Stocks are mixed ahead of FOMC announcement

With about 45 minutes to go until the latest policy announcement from the FOMC, the main indexes are mixed. The blue-chip Dow Jones Industrial Average is up 0.5% on strength from financial stocks American Express (AXP) and JPMorgan Chase (JPM).

The broader S&P 500 is 0.1% higher, while the Nasdaq Composite is down 0.2%.

Over in the bond market, the 2-year Treasury yield is off 2.7 basis points to 3.586%, while the 10-year Treasury yield is down 2.6 basis points at 4.16%. A basis point = 0.01%.

- Karee Venema

What savers should do after the latest Fed rate cut

As the Federal Reserve wraps up its final meeting of the year, it's a good time for savers to take stock of where their money sits and what adjustments might make sense heading into the new year.

"After the Fed issued rate cuts this year, APYs on savings accounts dropped. Adding to uncertainty for savers is the fact that there will be a new Fed chair next year when Jerome Powell's term ends in May. However, it isn't all doom and gloom. Some savings accounts still offer substantial gains, helping you reach your short-term savings goals," says Sean Jackson, personal finance writer at Kiplinger.

And Sean is right. A rate cut doesn't change APYs overnight. Many of the top online banks were still offering yields in the low-to-mid-4% range throughout 2025.

By late 2025, savings rates remained elevated compared to pre-hiking-cycle norms, though they had eased off their absolute peaks, signaling a gradual, not dramatic, cooling. For savers, that means there's still time to capitalize on relatively high returns before yields drift lower.

To brace for the uncertainty 2026 brings, read Smart Money Moves Savers Should Make in 2026.

- Carla Ayers

The Fed decision is in

As expected, the Federal Reserve lowered interest rates by a quarter-percentage point at its December meeting, bringing the federal funds rate to a range of 3.5% to 3.75%.

Three Fed officials dissented from the latest rate cut

There were three FOMC committee members who voted against today's rate cut. Fed Governor Stephen Miran supported lowering the federal funds rate by a half-percentage point, while Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee supported a pause.

These dissents are "feeding the narrative that the Fed could be on hold after this, if there is so much internal disagreement now," says Jim Patterson, managing editor of the Kiplinger Letter.

- Karee Venema

What changed in the December FOMC statement

Changes to the FOMC's latest policy statement include the following:

Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. (Previously read: Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments.)

In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. (Previously read: In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.)

The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis. (Previously read: The Committee decided to conclude the reduction of its aggregate securities holdings on December 1.)

- Karee Venema

What did the FOMC's Summary of Economic Projections show?

Federal Open Market Committee members left their projections for interest rates unchanged compared to September. According to the dot plot, the Fed is forecasting just one rate cut in 2026 and another in 2027.

The group expects real gross domestic product (GDP) to be slightly higher this year and next than it forecast in September, at 1.7% in 2025 and 2.3% in 2026. Meanwhile, inflation expectations drifted lower, too, with committee members now expecting PCE inflation to finish 2025 at 2.9% vs its previous estimate of 3.0% and end 2026 at 2.4%, down from 2.6% in September.

Expectations for the unemployment rate were unchanged at 4.5% for 2025 and 4.4% for 2026.

You can see the FOMC's full Summary of Economic Projections here.

- Karee Venema

Powell says the Fed will resume Treasury securities purchases

"In light of continued tightening in money market interest rates relative to our administered rates and other indicators of reserve market conditions, the committee judged that reserve balances have declined to ample levels," says Powell.

As such, the committee decided to initiate purchases of shorter-term Treasury securities, namely bills. The FOMC will begin with $40 billion in purchases in the first month and "may remain elevated for a few months."

- Karee Venema

SEP suggests only moderate rate cuts from here

In his opening statement, Fed Chair Jerome Powell reported that the Fed expects inflation to end the year at 2.9%, based on its preferred gage, and then ease to 2.4% at the end of 2026. He also said that the Fed now expects U.S. GDP growth of 2.3% next year, which is a bit stronger than the central bank had previously projected for 2026.

Powell noted that the labor market has weakened recently, with hiring likely down due to reduced immigration. He also shared his colleagues' average projection for where the Fed's benchmark interest rate is going, with a median estimate of 3.4% at the end of 2026 and 3.1% at the end of 2027.

Those are just estimates, not firm plans, but they suggest only modest additional interest rate cuts from the Fed's current range of 3.5%-3.75%.

- Jim Patterson

Powell agrees that the Fed is basically "on hold" for now

Asked in a follow-up question whether the Fed's modest projections of further rate cuts means that the central bank is "on hold" now, Powell basically said yes.

He indicated that the Fed's benchmark rate is now likely somewhere close to the "neutral" level that neither stimulates the economy nor restrains it to lower inflation.

No one knows precisely where that theoretical neutral point is, but the fact that Powell believes that the Fed has gotten fairly close to it certainly indicates that he won't be in a hurry to extend the string of cuts the Fed has made in recent months.

- Jim Patterson

Market participants aren't too shaken by Powell's rate-cut outlook

There have been several times in recent memory when Chair Powell's cautious take on future rate cuts has sparked a stock market selloff, but we're not seeing that so far today.

At last check, the Dow Jones Industrial Average is up 0.8% and the S&P 500 is 0.4% higher. The Nasdaq Composite is hovering around the flatline.

- Karee Venema

While there were more dissents than usual, Powell says all members agree that inflation is too high

Asked about the elevated level of dissenting members of the Federal Open Market Committee who did not support today's quarter-point rate cut, Powell emphasized that everyone on the FOMC agrees that inflation is still too high, and that there are also risks to economic growth right now.

Addressing those two problems puts the Fed in a bind in deciding whether to cut rates to combat inflation, or lower them to boost the economy and hiring.

It sounds from Powell's remarks on the Fed's deliberations this month that today's quarter-point cut was an attempt to balance those competing concerns.

"You can't do two things at once," he noted. All of that certainly fits with the signals that the Fed will be waiting for a bit now before cutting rates again in the new year.

- Jim Patterson

The bond market sees the federal funds rate as closer to neutral, says GammaRoad Capital Partners CIO

The bond market isn't making a major move in reaction to today's Fed decision. At last check, the 2-year Treasury yield was down 5 basis points at 3.563% and the 10-year Treasury yield was 2 basis points lower at 4.166%.

"Treasury futures' muted initial reaction to today's rate cut at both the short and the long end suggests that the bond market now views policy as much closer to the proper neutral rate," says Jordan Rizzuto, CIO at GammaRoad Capital Partners. "This is further evidenced by the tightening of the spread between the two-year yield and the policy rate. Since the Fed's previous rate cut, we have seen long yields steadily rising, and we expect that any dovish guidance in the press conference will renew this recent upward pressure on long rates, as further cuts could be interpreted by bond traders as excessive."

- Karee Venema

The labor market remains a concern for Fed officials

"The labor market has continued to cool gradually ... maybe just a touch more gradually than we thought" in October, Powell said, in explaining why the Fed opted to cut rates again today, when he had suggested at the previous meeting that it might stand pat in December due to a lack of economic data during the government shutdown.

"It doesn't feel like a hot economy" where strong job creation could lead to renewed inflation pressures, he said.

He is not sounding any alarms about the job market, but it does appear that there is a note of concern about hiring among Fed officials.

- Jim Patterson

Chair Powell believes the inflationary impact from tariffs could peak in Q1

Powell expects the inflationary impact of new tariffs to peak in the first quarter of 2026, barring new tariff announcements.

"It takes some months ... quite a while for an individual tariff to take effect," the Fed chair said.

If the FOMC is right about that, then inflation from goods should ease later in the new year, and help lower the overall inflation rate. He noted earlier in his remarks that services costs have been cooling, but rises in goods linked to Washington's new tariff regime have kept the headline inflation number uncomfortably high.

Of course, there is no guarantee that the White House won't roll out additional duties on imported goods and scramble that rosy scenario.

- Jim Patterson

Powell says the Fed is committed to 2% inflation

"We're committed to 2% inflation and we'll deliver 2% inflation," Powell promised, when asked why the Fed is cutting interest rates when inflation is still above its 2% target. "If you get away from tariffs, inflation is in the low 2s," he estimated, and he noted that the Fed can't influence U.S. trade policy.

If the price bump from tariffs turns out to be a one-time issue, as the Fed expects, then Powell said he is confident that overall inflation will get back close to 2%, from its current level near 3%.

- Jim Patterson

Why is Powell worried about job growth?

Asked about concerns on job growth, Powell explains "it's very difficult to estimate job growth in real time," and recently there's been "an overcount," as indicated by revisions on job reports.

Based on recent numbers and revisions, he says, we could be in a place of negative job creation, and in a world where job creation is negative, the chair says, "we have to watch that very carefully."

- Alexandra Svokos

Powell on AI

On the topic of AI and whether it is leading to job losses, Powell allowed that that might be happening, but probably at a minor level right now, despite some prominent layoff announcements from big companies that cited greater reliance on AI.

Across the economy, job losses appear to be small, with relatively few people filing new claims for unemployment benefits. Powell noted that historically, new technologies often prompt fears of automation replacing human workers, but they normally end up making the human workforce more productive in the long run.

Still, he noted that the Fed is on guard against further deterioration in the labor market as part of its dual mandate to keep prices stable and maintain full employment.

- Jim Patterson

Powell on his replacement

Asked about what he hopes his legacy as Fed chair will be as his tenure draws to a close, Powell had a simple message, that he wants the economy to be in a good place when he makes way for whoever his successor turns out to be. That means low unemployment and inflation "under control."

Those happen to be the Fed's two institutional mandates all of the time, but considering the creeping concerns about whether the job market is weakening and whether inflation will behave next year, you can't blame Powell for patting himself on the back if he manages to reach those two objectives by the time he hands off leadership of the Fed next spring.

- Jim Patterson

Job creation, price stability - and wealth inequality

Powell discussed the concept that higher-net-worth and income folks are driving consumption, noting that "it's clearly a thing," especially as asset values, including housing and securities, are high, and the people who own those assets are typically those at the "higher end of income and wealth." (The question and his answer allude to a K-shaped economy.)

Is that sustainable, that the top-third of Americans are driving "way more" than a third of consumption? He muses, somewhat ominously, that's "a good question."

And that's why, he clarifies, he and the FOMC are so focused on building price stability and a strong labor market, as those factors help lower-income and net-worth people. A strong labor market, particularly over a long period, he said, is important for wage growth for people in the lower quartile.

- Alexandra Svokos

The Fed can't save the housing market

While many Americans look to the Fed for lower interest rates they hope will bring more affordable housing, there's little water in that well. For one thing, mortgage rates tend to follow the 10-year Treasury more closely than the Fed.

For another, though, there are factors beyond rates at play in the housing market that are driving up costs. Primarily, there's the problem of supply. Housing supply is low for two reasons: First, because America simply hasn't built enough in recent years. Second, because people aren't moving ... because their mortgage rates are so low from the post-pandemic period, they don't want to sell their house just to buy a house with a high price and high mortgage rate.

So, yes, it's something of a vicious circle the Fed will get blamed for. But until more housing is built, it's hard to see a way out of rising home prices, even if mortgage rates go down.

- Alexandra Svokos

What investors need to do after today's Fed meeting

Today's Fed meeting revealed "quite disparate points of view" among FOMC members that highlight "unanswered questions we're all asking about where the economy is headed next year," says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.

The economy is in a delicate state right now, which could lead to weakness or higher inflation 2026, he adds. "This narrow balance is driving internal divisions within the Fed and more dissents."

And investors need to prepare their portfolios for these uncertainties, Schutte advises. "We’re encouraging investors to return to the fundamentals of investing, which means a focus on diversification and relative valuations – with an eye toward intermediate to longer-term relative returns."

For folks looking for a jumping-off point on how to position their portfolios, these core stocks are solid, long-term investments that can provide stable returns and steady growth. And these exchange-traded funds make our list of the best ETFs to buy for 2026 because they possess structural characteristics that make them attractive buy-and-hold options.

- Karee Venema

Markets get a boost from the Fed

All three main U.S. equity indexes closed higher on Fed Day following what many market participants may regard as an ideal scenario for the economy and the stock market described by the Federal Reserve.

The blue-chip Dow Jones Industrial Average closed higher by 1.1% at 48,057. The S&P 500 added 0.7% to 6,886, and the Nasdaq Composite was up 0.3% to 23,654.

The Fed's updated Summary of Economic Projections (pdf) reflects both concerns about the jobs market and persistent inflation as well as rosier growth expectations.

The median forecast shows 2.3% GDP growth in 2026, up from 1.8% in September, core inflation of 2.5%, down from 2.6%, and unemployment steady at 4.4%. Altogether, it adds up to only one rate cut in 2026.

The yield on the 2-year U.S. Treasury note ticked lower to 3.546% from 3.613% on Tuesday. The 10-year yield was down to 4.155% from 4.186%, and the 30-year was at 4.794% vs 4.809%.

The average year-end 2026 price target for the S&P 500 is up from around 6,500 in early September to 7,269 as of December 9, notes LPL Financial Chief Technical Strategist Adam Turnquist.

Turnquist cites the AI boom, stimulus from President Donald Trump's One Big Beautiful Bill and easing monetary policy as "key catalysts" for even more upside.

"A bottom-up analysis," he elaborates, "which aggregates analyst price targets for individual S&P 500 components, suggests the index could reach 7,900 by the end of next year."

– David Dittman

What's next for the Fed? FHN Financial's senior economist explains

Today's decision to cut rates was not unanimous, says Sophia Kearney-Lederman, senior economist at FHN Financial. And the dot plot showed that there were four soft dissents, "meaning four additional non-voters did not support the cut at the December meeting and would have preferred to leave rates unchanged."

Kearney-Lederman says talk will now turn to what's next for the Fed. "As Chair Powell said in the press conference, 'All across the Committee, people see the picture pretty similarly, but see the risks quite differently.'"

While the median projection for interest rates at the end of 2026 was unchanged from September, the range of forecasts widened, she notes, adding that the closer the federal funds rate gets to neutral, the slower the pace of rate cuts will be.

The economist believes "the focus will now shift to the great deal of data to be released between now and the next FOMC meeting" in late January, though "as Chair Powell pointed out in the press conference ... there are likely to be some distortions to the data. This means Wall Street and the Fed will remain in wait-and-see mode.

- Karee Venema

This is the time of year when Wall Street strategists look into their proverbial crystal balls to get a sense of what investors may face in the new year. This year, Kiplinger Personal Finance Magazine spoke with Keith Lerner, the chief market strategist and chief investment officer for Truist Wealth.

Lerner says the U.S. stock market will contend with "a carousel of concerns" but should come out ahead in 2026, thanks to strong fundamentals. Read on to see what's behind Truist's bullish view.

Kiplinger: What do you see ahead for financial markets in 2026? Do you have a target price for the S&P 500?

KL: We don't do targets. When we think about markets, we take a weight-of-the-evidence approach and keep an open mind. We look through four main lenses: History, the economic cycle, fun­damentals and market signals.

Okay, let's start with history.

Warren Buffett said if all you needed was history, the richest people would be librarians. But it's a good starting point.

There's an old saying that's still true: Bull markets don't die of old age. We've had 10 bull markets since 1957. Seven of those have lasted more than three years. In year four, you had further gains every time — an average of 16%. But there's a caveat: Year three tends to be choppy, with an average return of 1%.

We really didn't have much of that in 2025, so maybe that takes a little bit away from the next year's gain. Either way, the average cumulative price gain for those seven bull markets is 229%. At this point [through October 31], we're up 91%. That suggests the bull market has further to go.

We also did a study that found when the Federal Reserve cuts in­terest rates with the market near record highs, a year later, stock prices are up more than 90% of the time, with an average gain of 13.1% — with the key caveat that we don't fall into recession. And I should add that as you move into the fourth year of a bull market, it's not unusual to see pullbacks, with drawdowns of 8% to 10% common.

What's your take on the economy?

We're looking for a slight uptick in economic growth in 2026, after landing at about 1.8% in 2025. So a little bit better, but not gangbusters. The economy helps us to say whether we want to be on offense or defense or somewhere in between. We still want to be tilted toward equities, because we think there's further to go. But we're not at maximum equity exposure because it's not the beginning of the cycle.

There are three main factors that we think will support the economic environment: One, the tax changes that we saw in mid-2025 won't get implemented, or we won't see the benefits, until 2026. Consumers will see some tax refunds in the first quarter when they file their taxes, so we'll hopefully get a little bit of a boost in consumer spending from that. There are a lot of incentives for businesses as far as capital expenditures and accelerated depreciation; that will be helpful for companies.

And on the tariff front, we're at a point where companies are adapting, and at least on the margin there will be more clarity than we saw in 2025. The last factor is that the Fed is cutting rates — we think toward 3% on their benchmark rate by the end of 2026, from a target range of 3.75% to 4.0% at the end of October.

What's the risk to your economic outlook?

There's a divergence between labor-market and other economic data. Some of the reports on gross domestic product look stronger, but the labor market, any way you look at it, is softening. If we show a negative job-growth trend, it suggests that consumer spending, which is two-thirds of the economy, is going to slow down. That's a risk, but not our base case.

Let's discuss fundamentals.

The north star for the bull market is still corporate profits. As the stock market has reached new highs, so have the estimates for earnings. This year we've seen earnings growth expectations broaden out from tech and growth stocks to the average stock and to small caps. In the past couple of months, we've seen earnings trends move up across the board.

Here's the tension in the fundamental story: Valuations by almost any historical metric are high. A price-earnings ratio is a reflection of confidence — the market is expecting good things to happen. If they don't, it could become vulnerable. We need to see an economy that continues to chug along, and we need to see this dominant theme of artificial intelligence, tech and rising earnings trends continue to support the market.

Are you worried about an AI bubble? If uptake of the technology slows, or it isn't monetized as expected, will the boom turn into a bust?

Every bull market has a dominant theme; this one's is AI. Think of it as the ChatGPT bull market. ChatGPT came out in November 2022; the bull market started in October.

People ask me all the time if we're in a bubble. There are definitely pockets of froth, but overall, we're not seeing it. The tech sector is up just over 30% year over year through October. Back in the 1990s tech bubble, we saw 12-month gains of over 100% — that's a red alert you're in bubble territory. The sector is trading at around a 30 P/E; back then, it was closer to 50. That doesn't mean there's no risk. But the tech sector has the strongest earnings trend — estimates keep getting moved higher. That's what we're watching.

What are the market signals you're watching?

One reason the bull market deserves the benefit of the doubt is that the primary uptrend remains intact. Stocks overall are trading above their long-term moving averages [a series of average closing prices over a certain period — say, the past 200 days]. And that's not just in the U.S. but around the globe.

As the bull market matures, we're also watching investor sentiment, although it's an indicator that works better at market bottoms, when there's a lot of fear, than at market tops. When people become complacent and you see huge inflows into the market or sentiment surveys that show more bulls than bears, that's risky.

I would say sentiment is a bit elevated, but we're not seeing extreme euphoria. The carousel of concerns continues to spin, and as one recedes another comes up. These concerns keep euphoria in check.

Given your outlook, what's your portfolio advice?

Although investor goals and risk tolerances vary, we generally maintain a slight tilt toward equities. Compared with a portfolio of 50% stocks and 50% bonds, we recommend around 52% in equities, 44% in fixed income, 2.5% in gold and the rest in cash.

In the equity bucket, we've got 76% in the U.S. and 24% in international. We're still Team USA — that's where the earnings are, and the innovation as well. We have an overweight position in large-cap stocks with a growth tilt, but the outlook for small caps is improving, with lower rates and improving profits.

We're neutral on international markets, but in a world where there are a lot of crosscurrents, you want to be diversified. International markets are still relatively cheap; there is more stimulus in Europe and a new leader in Japan that the market is looking at as pro-business. The dollar looks like it has bottomed, but if it weakens further, for whatever reason, that's a reason to own international stocks. We've also added to emerging markets but are still underweight relative to market benchmarks.

On the fixed-income side, we think yields will trend lower in 2026. We like intermediate-term, high-quality, plain-vanilla Treasuries. We're underweight on high-yield corporate bonds — we're taking our risks on the equity side.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related Content

• What's Next for the Fed — as an Institution?
• 3 Major Changes Investors Must Prepare for in 2026
• Core Stocks Every Investor Should Own In 2026 and Beyond

The September jobs report, delayed from its initial October 3 release date due to the record-long government shutdown, came in higher than expected. While this is good news for those worried about a sharp slowdown in the labor market, it does keep the odds of a December rate cut low.

According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by 119,000 in September, beating economists' estimate for 50,000 new jobs. Figures for July were revised down by 7,000, from +79,000 to +72,000, while those for August were revised lower by 26,000, from +22,000 to -4,000.

These revisions result in 33,000 fewer jobs combined in July and August than previously reported.

As for September, job gains were seen in health care (adding 43,000) and social assistance (adding 14,000). However, federal government jobs declined by 3,000, and are now down by 97,000 since January.

The unemployment rate, which is calculated from a separate survey, ticked up to 4.4% from 4.3%. The data also showed that wage growth was 0.2% higher month over month in September and up 3.8% year over year.

"The delayed September employment data will likely not have had enough of an impact to convince the Fed to cut at the December meeting," says Ryan Weldon, investment director and portfolio manager at IFM Investors. "The minutes from the October meeting revealed clear apprehension from more than a few Fed members regarding support for a December cut, and the cancellation of the October jobs report due to the government shutdown will only reinforce a cautious approach in December."

Weldon adds that the Federal Reserve still considers the federal funds rate to be in restrictive territory, "but the data uncertainty and conflicting inflation and employment pressures will keep them cautious until the macro backdrop clears up."

According to CME Group's FedWatch, futures traders are now pricing in a 58% chance the Fed will keep interest rates unchanged when it concludes its next meeting on Wednesday, December 10, up from 1% one month ago. Odds are at 50% that the central bank will cut rates by a quarter-percentage point when it meets in January.

With the September jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.

Experts' takes on the September jobs report and what it means for the Fed

"Thursday's jobs report was much stronger than expected and it's possible that the Federal Reserve may take more of a wait-and-see approach to rates in December, especially since there is still uncertainty over the economic data, which has only first started to come back online after the drought from the government shutdown. Thursday's jobs report suggests that the labor market is not as weak as feared." – Alexander Guiliano, Chief Investment Officer at Resonate Wealth Partners

"The Fed's decision when they meet in December is a tricky one, but there's a good chance that would be the case even with all of the data in hand. With risks to both sides of their dual mandate at odds, they're seeking clarity in an incomplete picture. We don't yet know when the next batch of consumer inflation data will be released, and this will be the last jobs report before their meeting. Fortunately, they will get some insight into the actual state-of-play in layoffs when the October JOLTS report is released the first day they convene." – Elizabeth Renter, Senior Economist at NerdWallet

"This combination — solid job gains and stable pay growth — complicates the Federal Reserve's task: it shows that labor demand remains firm, even as the Fed seeks clearer signs of cooling before committing to rate cuts. Interestingly, the initial reaction saw markets pricing in a higher chance of a cut likely focusing on the unexpected rise in the unemployment rate. As a result, the dollar pared back some of its daily gains, as did yields, whilst the stock market took it as another sign to build on yesterday's reversal. However, this momentum may fizzle out quickly as the data is digested further, with the potential for a continuation in the dollar rebound as markets reassess the rate cut odds." – Daniela Hathorn, Senior Market Analyst at Capital.com

"A December cut remains possible given continued labor market softness as expressed by the unemployment rate. Weak hard data and close-to-target inflation look set to drive policy going forward, despite recent hawkish noises. The setup is in place for Powell to continue his risk-management approach to the labor market before his term as Chair expires in May." – Kay Haigh, Global Co-Head of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management

"The one-two punch of a stellar Nvidia earnings report last night and a better-than-expected September jobs report this morning should give the market a boost, given that it directly addresses the two biggest concerns of the bears: an AI bubble and a moribund economy." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"Although job cut announcements have risen, actual layoffs remain tame as evidenced by this morning's decline in initial jobless claim filings back toward recent lows. We believe the December Fed meeting remains a toss-up, with the hawkish case being bolstered by strong headline job creation and the dovish case supported by the rise in the unemployment rate to 4.4%. More immediately, today's payrolls release is being viewed as a 'good news is good news' dynamic for equities, which we believe is appropriate given that today's data does not show downside risks to labor materializing while keeping the prospect for further rate cuts alive, whether next month or in 2026. This dynamic should provide support for risk assets in the near term." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments

"September's long-awaited jobs report offers a reminder that the labor market is cooling — and maybe faster than the headlines suggest. Payrolls rose 119,000, a mild upside surprise, but the unemployment rate climbed to 4.4 percent and is now closing in on the Fed's 4.5 percent projection ahead of schedule. The underlying trend is softer than it looks. That's why the more aggressive tone from the Fed lately feels misplaced. Inflation has eased ex-tariff related goods, labor slack is building, and today's data is stale and mixed at best. Tightening the screws now risks leaning into a slowdown already in motion." – Timothy S. Chubb, Chief Investment Officer at Girard

"From an investment perspective, we are all really looking for any signs of direction in the overall employment picture. Monthly payroll gains are part of that, but they are only one piece. Another indicator that can offer early insight is the quits rate. When people are less willing to quit, it generally means they know that finding a new job, especially a better job, is unlikely, which can portend higher unemployment." – Katie Klingensmith, Chief Investment Strategist at Edelman Financial Engines

Related content

• Kiplinger's Economic Calendar for This Week
• Earnings Calendar and Analysis for This Week
• When Is the Next Fed Meeting?
• 6 Quick Money Moves to Make Before the Year Ends
• The Best Defensive ETFs to Protect Your Portfolio

To help you understand what is going on in the economy, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we publish many (but not all) of our forecasts a few days afterward online. Here’s the latest...

Now that the federal tax credit has expired, what is the outlook for electric vehicles in the U.S.? Sales surged as buyers rushed to cash in on the credit before it expired on September 30, then crashed. Here’s how we see the EV market in the longer term.

Once a novelty, EVs are here to stay. But they will occupy a much smaller share of the market in the coming months and beyond, now that the $7,500 federal tax credit is no more. (Note that some states offer tax credits of their own.) Early this year, before talk of Congress axing the credit influenced buyers, EVs accounted for 7.9% of car sales. For the time being, we see that level dropping to 5-6% or so, as demand finds its natural, unsubsidized level.

Surveys show many consumers are interested in electric cars, even if they’re not ready to buy one. Manufacturers will keep building them, but in reduced numbers. Some existing EVs are already getting canceled, along with future models that automakers are now rethinking. Vehicle lineups that were supposed to transition to mostly or all EV in a few years now appear likely to stay mostly gas.

The good news for EV-curious consumers: There will be cheap used models hitting the market in the next few years. EV leasing soared after the Biden era made it easier to qualify for the federal tax credit that way. That flood of used vehicles will be returning to the market, giving value-minded shoppers lots of potential deals.

Cheaper, low-mileage used EVs may be the ticket to convincing wary buyers to consider going electric, now that demand from early adopters has been satisfied. Many drivers won’t be lured, either because an EV doesn’t meet their specific needs or a simple preference for gas. But a decent number of folks appear to be on the fence and may try a used electric model, if the financial math pencils out.

That being said, assuring potential buyers that used EVs’ batteries are sound will be key. Replacing EV batteries costs thousands, even tens of thousands, of dollars. Automakers and dealers will tout new “state of health” certifications showing the useful capacity an EV battery has. They may be rolled into automakers’ certified pre-owned programs, which inspect and vouch for quality used cars, and come with an extended warranty.

More public charging stations will also help, eventually. As of August, the U.S. had 229,000 public charging ports, though they tend to cluster around urban areas, vary in charging capacity and can be prone to failure. More and faster ones are needed. For now, EVs’ lost market share will likely be gobbled up by hybrid models. Consumers are really warming up to them as a compromise that keeps the familiarity and advantages of gas, with fuel efficiency boosted by batteries and electric motors. They’ll likely account for 15% of new car sales soon as more models come as hybrids.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related content

• Kiplinger Retail Outlook
• Is the EV Tax Credit Going Away Under Trump? What You Need to Know
• EV Charger Tax Credit for 2025 and 2026: What You Need to Know

Americans’ money worries are stacking up as tariffs, inflation and a weakening jobs outlook take an increasing toll. Even stocks hitting a series of record highs lately hasn’t been enough to shake the financial jitters, with memories of the market’s spring swoon still relatively fresh.

Four out of five Americans in a survey by Discover this summer said they feel anxiety about their finances — an increase of nine percentage points since 2021 — and one-third characterized their stress as moderate to severe. The findings echo recent studies by Northwestern Mutual and Motley Fool, which found that more than half of Americans now worry about their finances at least three times a week.

Overall sentiment in the U.S. continues to deteriorate, with major gauges of consumer confidence falling in August. Topping the list of concerns: high inflation and everyday expenses, followed by job fears and worries about a recession.

“The change in trade policies and uncertainty over prices — most of our clients are aware of that, and it puts them on edge,” says certified financial planner Eric Walters, managing partner at Summit Hill Wealth Management in Greenwood Village, Colo.

The concerns are not unfounded. Several measures of inflation have been inching higher recently, and many retailers and consumer goods manufacturers are warning that prices will continue to rise due to tariffs. The latest analysis from the Budget Lab at Yale University suggests tariffs could add 1.8% to price increases this year, the equivalent of an average income loss of $2,400 per U.S. household. At the same time, employers are becoming reluctant to hire, creating another economic headwind.

What makes experts anxious, though, is that many people may make impulsive and possibly damaging money decisions to ease their worries, such as moving most of their retirement savings to cash or loading up on gold, cryptocurrency and other high-risk alternative assets.

“Everybody wants to get back into the driver’s seat of their lives financially, so they look at what they can control,” says CFP Bob Wolfe, founder of HealthyFP in Conshohocken, Pa.

These steps can help you tackle money worries in a healthy way.

Zero in on your biggest concern

Pin down what disquiets you the most, then work on a specific plan to address that worry. If high prices top your list, for instance, you might start by reviewing your budget to find ways to lower expenses, says Juan HernandezAriano, a CFP and director of WealthCreate in Houston. For example, you might be able to take advantage of available discounts, cancel little-used streaming services and subscriptions, or negotiate a lower interest rate on debt.

If you’re retired and inflation is fueling fears you could outlive your savings, consider shifting an additional three to six months’ worth of expenses from your investment portfolio to a lower-risk, easily accessible money market account or high-yield savings account that you can dip into as needed. That way, you’ll avoid selling stocks at a low if the market drops sharply again, HernandezAriano says. Temporarily lowering your annual portfolio withdrawals — say, from 4% to 3% — can help as well.

Naming your next three moves if your worst fears materialize is also a good exercise, HernandezAriano says. If you’re worried about losing your job, for example, you might assess your cash reserves to make sure you have enough on hand to meet your immediate bills, plan to file for unemployment benefits, and figure out how you’d maintain health insurance.

“The anxiety is reduced simply because you start flushing out that uncertainty,” HernandezAriano says.

Avoid habits that fuel your anxiety

Keeping up with the 24/7 news cycle and reading constant social media posts about the economy can trigger your brain to release “a burst of dopamine, which feels good and trains the brain to seek out more news,” says CFP and therapist Joy Slabaugh, founder of the Wealth Alignment Institute. But doing that ultimately feeds your anxiety, so “set up safeguards to turn that off,” she advises. Maybe limit your financial news viewing to an hour or less a day or stop following alarmist economic pundits on social media platforms.

Similarly, take a break from looking at your portfolio balances. “Those who check their investments frequently have a greater likelihood of seeing the inevitable short-term ups and downs,” says Walters, even though over the long term the market typically rises.

Clients who instead rely on quarterly updates have lower stress, Walters says — and research shows they average significantly higher returns on their investments as well.

Get perspective

Accept that some factors are out of your control, says Patrick Huey, a CFP and owner of Victory Independent Planning in Naples, Fla. He likes to offer his clients a reassuring historical perspective: Periodic bear markets and recessions are normal, and so is eventual recovery. “They feel like, okay, this isn’t the first time this has happened,” he says.

Instead of checking your portfolio, review your long-term financial plan, which should account for market ups and downs, recessions, and other setbacks, such as higher-than-average inflation. It also offers a concrete representation of your wealth and goals, how far you’ve come, and where you’re going. “It lowers the stress level,” Walters says. “You feel like there’s a map for your life.”

Allow yourself some grace

Avoid beating yourself up for feeling anxious, says Rick Kahler, a financial adviser and certified financial therapist in Rapid City, S.D. Instead, use the emotion to your benefit. “It’s what we call a trailhead to explore,” Kahler says. “It will lead us to some place that can be really productive.”

There’s also a good chance you’re not the only one dealing with financial jitters. Reaching out to trusted family and friends can help. As Slabaugh notes, “There can be comfort and solidarity in realizing you’re not the only one who feels this way.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related

• How Tariffs Work and What They Mean for You in 2025
• Is High-Yield Savings Account Interest Taxable?
• Kiplinger Inflation Outlook

The October Fed meeting wrapped up on October 29, with the central bank's latest policy decision. As expected, it reduced interest rates once again, by a quarter-point.

Following a recent string of lower-than-expected jobs data, the central bank resumed rate cuts at its September meeting. And while the ongoing government shutdown has delayed the release of key economic data – including the September jobs report – private data releases, such as the ADP Employment Report, underscore weakness in the labor market.

The Kiplinger team reported live on the October Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy.

Best Stocks to Buy for Fed Rate Cuts | Falling Interest Rates: What They Mean for Homeowners, Savers and Investors | Quiz: How Well Do You Know the Fed?

September CPI comes in lighter than expected

The September Consumer Price Index showed that President Donald Trump's tariff policies have had a muted impact on cost pressures – and all but guarantees the Federal Reserve will lower the federal funds rate on Wednesday afternoon.

According to the Bureau of Labor Statistics, headline CPI was up 0.3% month over month in September, slower than the 0.4% rise seen in August and the 0.4% increase economists expected.

The CPI was 3.0% higher year over year, a quicker pace than the month prior. Still, the results arrived below the 3.1% increase economists anticipated.

Gas prices were the biggest contributor to the increase in headline CPI, surging 4.1% from August to September. Food costs were also up last month, rising 0.2%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, rose 0.2% month over month and 3.0% year over year – coming in below August's figures and economists' forecasts.

"Inflation might not be slowing, but it's not surprising to the upside anymore," says David Russell, global head of market strategy at TradeStation. "The details are positive, with shelter and transportation services moderating. Some key parts of the basket are cooling even if tariffs nudge items like apparel higher."

Russell adds that the September CPI report keeps the Fed on track to cut rates by a quarter-percentage point at next week's meeting, and will likely have policymakers striking a more dovish stance moving forward.

While delayed from its originally scheduled October 15 reporting date, the BLS released today's data so that the Social Security Administration could calculate the cost-of-living adjustment (COLA). But with data collection services still suspended, it's unclear when we'll see the next CPI report.

- Karee Venema

Fed meeting schedule for 2025 and 2026

The next Fed meeting, which runs from October 28 to October 29, marks the seventh gathering of 2025. That means there's one more to go after that.

"The committee meets eight times a year, or about once every six weeks," writes Kiplinger contributor Dan Burrows in his feature, "When Is the Next Fed Meeting?".

The Federal Open Market Committee "is required to meet at least four times a year and may convene additional meetings if necessary," Burrows adds, noting that "the convention of meeting eight times per year dates back to the market stresses of 1981."

Fed meetings last two days and wrap up with the release of a policy decision at 2 pm Eastern Standard Time. This is typically followed by the Fed chair's press conference at 2:30 pm.

Here is the full Fed meeting schedule for 2025:

• January 28 to 29
• March 18 to 19
• May 6 to 7
• June 17 to 18
• July 29 to 30
• September 16 to 17
• October 28 to 29
• December 9 to 10

And here's the full Fed meeting schedule for 2026:

• January 27 to 28
• March 17 to 18
• April 28 to 29
• June 16 to 17
• July 28 to 29
• September 15 to 16
• October 27 to 28
• December 8 to 9

- Karee Venema

Expect more rate cuts in 2026, says BMO

The September CPI report all but locks in quarter-percentage-point rate cuts in both October and December, says Douglas Porter, chief economist at BMO Financial Group.

"Looking a bit further ahead into 2026, we suspect that the near-absence of serious tariff-related inflation sets the stage for additional cuts," the economist adds. "After all, core goods prices, the very area one would expect tariffs to affect, rose a moderate 0.2% last month and 1.5% in the past year. True, that's up from essentially no inflation in this category in the decade up to 2020, but it's not the shape-shifting pace that many analysts expected in the wake of double-digit tariffs."

Porter adds that moderating shelter inflation – it rose just 0.2% on a monthly basis in September after a 0.4% rise in August – should have headline and core inflation averaging annual increases of just below 3% next year.

As such, he's expecting an additional 75 basis points of rate cuts in 2026, bringing the federal funds rate south of 3% when all is said and done.

- Karee Venema

Wall Street shouldn't expect a half-point rate cut anytime soon

Today's mostly benign inflation report for September should make the Federal Reserve more comfortable with cutting short-term interest rates by another quarter-point at their policy meeting on October 29.

Although September employment data has not been published because of the ongoing federal government shutdown, the Fed will assume that the labor market weakness shown in the August report is continuing, which justifies a rate cut.

It seems likely that the Fed will also cut by a quarter point at its December 10 meeting before pausing. However, those who are expecting a half-point cut at either of these two meetings are likely to be disappointed.

Read more: Kiplinger Inflation Outlook: Stable for Now, but With Signs of Increasing Tariff Pressure

- David Payne

It's a big week ahead for Wall Street

Next week will be a busy one on Wall Street. In addition to the Fed meeting, market participants will also have a jam-packed earnings calendar to sift through.

Among the most notable names reporting are Alphabet (GOOGL) on Wednesday evening, and Amazon.com (AMZN) and Apple (AAPL) after Thursday's close.

"So far, Q3 results are off to a good start – S&P 500 earnings are up around 9% year over year, marking the ninth straight quarter of growth, the longest streak since 2018," says Raymond James Chief Investment Officer Larry Adam. "Plus, 82% of companies are beating EPS estimates – the best showing since Q3 2023."

Additionally, President Donald Trump is scheduled to talk with Chinese President Xi Jinping on Thursday ahead of the APEC summit in South Korea. Trade tensions between the two countries have escalated in recent weeks, though Adam notes that this appears to be posturing ahead of the November 10 trade deadline.

"Neither side wants to look weak, but neither wants a repeat of the turmoil earlier in the year," Adam says. "While it's unrealistic to expect the Trump-Xi meeting to resolve all issues, even a shift toward calmer rhetoric could help move negotiations forward."

- Karee Venema

Stocks notch new highs ahead of Fed week

The three main indexes finished at record highs on Friday. At the close, the Dow Jones Industrial Average was up 1.0% at 47,207, the S&P 500 was 0.8% higher at 6,791, and the Nasdaq Composite had gained 1.2% to 23,204.

Over in the bond market, the 2-year Treasury yield slipped 2 basis points to 3.48% and the 10-year Treasury yield ticked up 8 basis points to 3.997%, both near their lowest level of the past 12 months.

- Karee Venema

Who gets to vote at the October Fed meeting?

The Federal Open Market Committee (FOMC) has 12 total members, eight permanent and four who rotate each year.

The eight permanent voting committee members include the Fed chair and vice chair, the five Fed governors and the president of the New York Fed.

Four regional Fed presidents are rotated in each calendar year.

The 2025 FOMC voting committee consists of:

• Fed Chair Jerome Powell
• Vice Chair Philip Jefferson
• Fed Governor Michael Barr
• Fed Governor Michelle Bowman
• Fed Governor Lisa Cook
• Fed Governor Stephen Miran
• Fed Governor Christopher Waller
• New York Fed President John Williams
• Boston Fed President Susan Collins
• Chicago Fed President Austan Goolsbee
• St. Louis Fed President Alberto Musalem
• Kansas City Fed President Jeffrey Schmid

In 2026, the presidents from Cleveland, Philadelphia, Dallas and Minneapolis will rotate in as FOMC voting members, according to the Federal Reserve.

- Karee Venema

Barclays economists expect two more rate cuts in 2025 and two in 2026

Ongoing elevated downside risks to the labor market will likely encourage the Fed to cut interest rates by a quarter-percentage point on Wednesday, say Barclays economists.

The group expects Fed Governor Stephen Miran – who voted for a half-percentage-point cut in September – to dissent once again in favor of a 50 basis-point reduction.

"We expect hawks to support the cut but would not be surprised if [Kansas City Fed President Jeffrey] Schmid or [St. Louis Fed President Alberto] Musalem dissented in favor of an unchanged rate," the Barclays economists add.

And given the risks to the labor market and little change in inflation, the group is anticipating another rate cut in December and two more in 2026 – at the Fed's March and June meetings.

The economists say there's a possibility that the FOMC will announce the end of quantitative tightening, which Fed Chair Jerome Powell hinted at in a recent speech, on Wednesday afternoon, but think this is more likely to occur in December.

- Karee Venema

Will the Fed cut rates in October?

The Federal Reserve is widely expected to cut interest rates at its October 28-29 meeting as inflation holds steady and downside risks to the labor market remain.

As of October 25, CME Group FedWatch showed futures traders are pricing in a 98.3% probability the FOMC will lower the federal funds rate by 25 basis points (0.25%) to a range of 3.75% to 4.0%. This would mark its lowest level since late 2022.

- Karee Venema

Economic growth remains strong, according to S&P Global

S&P Global said Friday that "U.S. business activity growth accelerated in October to the second-fastest so far this year." This is according to its flash Purchasing Managers Index (PMI) data, with both its Services PMI and Manufacturing PMI hitting a two-month high in the initial October reading.

"Improvements in output and new work were recorded in manufacturing and services, though both sectors signaled falling exports," S&P Global stated in its report. "Factories also reported falling input buying amid a steep drop in backlogs of work and an unprecedented build-up of unsold stock."

The data also showed that employment growth improved, though the pace of job creation was "modest" and job growth was "limited by a worsening of business confidence, principally reflecting ongoing concerns over the impact of government policies."

Chris Williamson, chief business economist at S&P Global Market Intelligence, said that despite signs of continued economic growth, business confidence is deteriorating amid worries over the impact of policies, most notably tariffs.

As one example of the struggles businesses are facing, manufacturing input costs remain high due to tariffs, but companies "often reported difficulties passing higher costs on to customers in the face of subdued demand and intense competition."

- Karee Venema

How can you invest for lower interest rates?

With the Federal Reserve expected to cut rates at its two final meetings of 2025, many investors may be wondering how they can prepare their portfolios.

One way is to seek out high-quality growth stocks, which tend to see outsize benefits from lower interest rates.

This happens for two reasons, says Kiplinger contributor Charles Lewis Sizemore, CFA. For one, lower rates make capital cheaper and "young, fast-growing companies often rely on external funding."

Additionally, lower interest rates boost the current value of future profits, which increases valuations for firms with long-term earnings potential.

Read more: How to Invest for Fall Rate Cuts by the Fed

President Trump announces 10% tariffs on Canada

After calling off trade talks with Canada on Thursday night in response to a television ad featuring excerpts from one of former President Ronald Reagan's national radio addresses, President Donald Trump said he is implementing an additional 10% tariff on the country.

No other details were given in Trump's Truth Social post other than this 10% tariff will be "over and above what they are paying now."

"Just to recap," says Douglas Porter, chief economist at BMO Financial Group, "the U.S. has imposed a 50% tariff on steel and aluminum, up to 25% tariff on vehicles, a 45% tariff on lumber."

Porter adds that he expects the Bank of Canada to cut its key interest rate at its meeting this week (October 29) due to these deteriorating trade conditions.

- Karee Venema

What time will the Fed statement be released and what changes are expected?

The Federal Open Market Committee will release its updated policy statement at 2 pm Eastern Standard Time on Wednesday, October 29.

"Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated," the committee wrote in its September statement.

This time around, Deutsche Bank economists anticipate several changes based on what Fed Chair Powell had to say during his October 14 speech at the National Association for Business Economics Annual Meeting.

"Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago," Powell said in his speech. "Data available prior to the shutdown, however, show that growth in economic activity may be on a somewhat firmer trajectory than expected."

As such, Deutsche Bank economists "expect the Committee to tweak the first line in a slightly more hawkish direction by stating, 'Preliminary indicators suggest that growth in economic activity has firmed since the first half of the year.'"

The group believes the FOMC will leave the mention of "elevated" economic uncertainty unchanged in the second paragraph of the statement, but they expect the committee to announce the end of its balance sheet runoff program, or quantitative tightening, in the third paragraph.

- Karee Venema

How well do you know the Fed?

Fed meetings have become key events on Wall Street after inflation hit a pandemic-induced 40-year peak in 2022 – which forced the central bank into an aggressive rate-hiking campaign that lifted the federal funds rate to its highest level in more than two decades.

But how well do you know the Fed?

With the next Fed meeting on deck, we decided to test your basic knowledge of the Federal Reserve and how its actions impact you and your money.

Quiz: How Well Do You Know the Fed?

Stocks are set to start Fed week at new highs

The three main stock market indexes are all pointed higher ahead of Monday's opening bell as upbeat U.S.-China trade headlines boost sentiment.

Reports from over the weekend suggest the two countries have hashed out a framework for a trade deal ahead of this Thursday's meeting between U.S. President Donald Trump and Chinese President Xi Jinping.

"We are moving forward to the final details of the type of agreement that the leaders can review and decide if they want to conclude together,” U.S. trade representative Jamieson Greer told reporters Sunday. The negotiations included export controls and reciprocal tariff extensions.

At last check, Dow Jones Industrial Average futures were up 0.5%, the S&P 500 futures were 0.8% higher, and futures on the Nasdaq-100 jumped 1.3%. On Friday, the indexes ended the week at new record closing highs.

The bond market has it right, says Manulife John Hancock Investments strategists

Manulife John Hancock Investments Co-Chief Investment Strategists Emily Roland and Matt Miskin will be watching the 2-year Treasury yield and the U.S. dollar this Fed week.

While the strategists say there is no perfect predictor of Fed policy, the yield on the 2-year government bond note has proven to be one of the best.

The yield is currently hovering around 3.5% – near its lowest level in the past 12 months – and the strategists think a more dovish Fed could send it even lower.

"The bond market is currently pricing in 2 more cuts in 2025 and then three more in 2026," write Roland and Miskin in emailed commentary. "To us, this seems about right. They want to keep cutting to get closer to neutral, but want to save some cutting dry powder in case they need it." And the central bank still has plenty of room to ease, if needed, the pair adds.

Roland and Miskin also note that this week's Fed meeting could have big implications for the U.S. dollar. "A dovish Fed could cause the U.S. dollar to further weaken," they say.

As for the stock market, the two admit that elevated market valuations remain a concern, but "strong earnings growth, the Fed doing insurance cuts, and a potential trade deal are all positives reinforcing the recent strong global equity performance."

- Karee Venema

Bessent talks about Jerome Powell's replacement

Jerome Powell's term as Fed chair will expire on May 15, 2026. While it seemed possible earlier this year that President Trump might consider firing Powell before his term was up, this is unlikely to happen given the limited time left.

That said, we may have more solid clues as to who Jerome Powell's replacement will be by year's end.

On Monday, Treasury Secretary Scott Bessent said that the list of potential candidates to replace Powell as Fed chair has been pared down to five: current Fed Governors Christopher Waller and Michelle Bowman, National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh and BlackRock executive Rick Rieder.

Bessent is conducting interviews with the candidates and said he will send a final list to President Trump after the Thanksgiving holiday.

Earlier today, Trump told reporters that he expects to name the top pick by the end of 2025.

For what it's worth, Powell's term as a member of the Board of Governors of the Federal Reserve ends on January 31, 2028.

- Karee Venema

Fed Chair Powell and his purple ties

The odds of an October rate cut are high. It's also a safe bet that Fed Chair Powell will be wearing a purple tie during Wednesday's press conference.

That's because Powell always wears a purple tie … and there's a reason for it.

During an early April Q&A session with journalists at the Society for Advancing Business Editing and Writing conference, Powell was asked about the significance of his purple ties.

"At the beginning, the only significance was that I like purple ties," Powell replied. At his next press conference, he said he went to reach for a red or blue tie and thought, "Maybe not … so I wind up wearing purple."

He said now it's become "a thing," and it supports the fact that the Fed "is strictly non-political" and "bipartisan," and purple is a good color for that.

"Plus, I like purple ties," Powell concluded.

- Karee Venema

Where are all the Fed speakers right now?

The Fed-speak is non-existent right now. That's by design. And, setting aside arguments about correlation vs causation, markets are behaving well in the silence.

Since Saturday, October 18, and until Thursday, October 30, participants in the FOMC meeting have been bound by a Federal Reserve policy that limits the extent they can talk about the economy and interest rates.

These two-week "blackout periods" begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting. The Fed's blackout period was an unofficial practice that began in the 1980s. It was formalized in 2011 and reaffirmed in January 2025.

Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed's most intense periods of policy-making.

Here is a schedule for all blackout periods through January 2027.

During the current quiet period, the S&P 500 is up 2.9%, the Dow Jones Industrial Average is 2.7% higher and the Nasdaq Composite has gained 4.0%.

- David Dittman

When is Jerome Powell speaking?

Fed Chair Powell will host a press conference at 2:30 pm Eastern Standard Time on Wednesday, October 29.

Barclays economists expect Powell to reiterate, as he did in his October 14 speech, that there has been little change in economic conditions since the central bank last met in September.

"He will likely note that growth in economic activity may be on a somewhat firmer trajectory than expected, due to AI-related investments and a resilient consumer," the group says.

However, they believe he will emphasize that "downside risks to employment remain elevated," and will "reiterate that the slower job gains reflect in part immigration restrictions and aging."

The economists also think the Fed chair will point out that weak shelter inflation helped the September CPI report come in below expectations, tariffs have increased prices on certain goods and will likely lift prices on other goods down the road.

That said, Barclays economists believe Powell will underscore the importance of keeping longer-term inflation expectations anchored and making sure that one-time price increases due to tariffs do not become "an ongoing inflation problem."

- Karee Venema

When is Trump meeting with Xi?

U.S. President Donald Trump will meet with Chinese President Xi Jinping this Thursday, October 30, while attending the APEC summit in South Korea.

"Recall that trade tensions have risen ahead of the meeting with China threatening to raise restrictions on rare earth supplies and President Trump responding with 100% tariffs on China set to begin on November 1," say Deutsche Bank economists. "Note, also, that the original trade truce negotiated last summer expires November 10."

However, Treasury Secretary Scott Bessent, following his meeting with Chinese Vice Premier He Lifeng, said that the two countries worked out "a very successful framework for the leaders to discuss on Thursday."

The negotiations reportedly included discussions on export controls, TikTok, soybean purchases and rare earths.

Bessent also said that he believes the November 10 reciprocal tariff deadline could be extended following the talks, but that decision ultimately rests with President Trump.

Still, as Deutsche Bank economists note, given the lack of economic data releases, the Trump-Xi summit is one of several substantial headline risks for market participants to contend with this week.

- Karee Venema

Stock futures point higher as Fed meeting kicks off

The stock market is signaling a higher open as the October Fed meeting kicks off. The Federal Open Market Committee will conclude its gathering tomorrow afternoon, with the central bank widely expected to announce its second straight rate cut.

At last check, Dow Jones Industrial Average futures were up 0.5% on well-received earnings from health care giant UnitedHealth Group (UNH). S&P 500 futures were 0.1% higher and Nasdaq-100 futures have risen 0.2%.

This follows Monday's positive price action, which sent the three main indexes to new record highs.

Bank of Canada, Bank of Japan and the ECB also meet this week

This week is a busy one for global central banks. The Bank of Canada will announce its latest policy decision tomorrow, October 29.

"We've long been on the dovish end of consensus for the Bank of Canada in 2025," says Robert Kavcic, senior economist at BMO Capital Markets. And with a soft economy and job market, "another rate cut at this meeting would be consistent with that view.

The Bank of Japan is expected to hold rates steady at its gathering on Thursday, October 30, but BlackRock strategists will be watching "for hints of the timing of a next hike."

The European Central Bank (ECB) will also announce its policy decision on Thursday. "The October ECB meeting should be a placeholder, with no rate change and only fine-tuning of communication," says the BofA Securities Global Rates & Currencies Research team. "We still expect a cut in December and March, but conviction on December is getting smaller."

Looking ahead, the Bank of England (BoE) could lower interest rates next Thursday, November 6, following last week's lower-than-expected inflation print. However, the central bank may wait until the late-November release of Chancellor Rachel Reeves's Autumn Budget.

"While a cut in November is more likely after [the] latest inflation data, it's by no means guaranteed," says Hal Cook, senior investment analyst at Hargreaves Lansdown.

- Karee Venema

Consumer confidence edges lower in October

The Conference Board's Consumer Confidence Index slipped to 94.6 in October from September's upwardly revised 95.6 reading.

The Present Situation Index, which measures consumers' opinions on current business and labor market conditions, rose 1.8 points to 129.3, while the Expectations Index, which tracks the short-term outlook for business, income and labor market conditions, fell by 2.9 points to 71.5.

"Consumer confidence moved sideways in October, only declining slightly from its upwardly revised September level,” said Stephanie Guichard, senior economist, global indicators at The Conference Board. "Consumers were a bit more pessimistic about future job availability and future business conditions while optimism about future income retreated slightly."

Confidence fell the most for those under 35 and those making less than $75,000 per year. It saw the biggest improvement from consumers aged 35 to 54 and those making over $200,000.

"Consumers' write-in responses were led by references to prices and inflation, which continued to be the main topic influencing consumers' views of the economy," added Guichard. "References to U.S. politics were up notably, with the ongoing government shutdown [was] mentioned multiple times as a key concern."

The report also showed that survey respondents' plans to buy used cars increased in October, while home-buying plans decreased. Additionally, consumers suggested they will spend less for the holidays this year.

- Karee Venema

Who appointed Jerome Powell as Fed chair?

Jerome Powell stepped into his role as Fed chair on February 5, 2018, after being nominated by then-President Donald Trump, who was serving his first term in the White House.

Powell's initial four-year stint as head of the Federal Reserve ended in 2022, but he was reappointed for a second four-year term on May 23, 2022, after being nominated by then-President Joe Biden.

Powell initially joined the Fed's Board of Governors in 2012 after he was nominated by then-President Barack Obama.

While Powell's second term as Fed chair will expire in May 2026, he will remain on the Fed's board until January 2028.

- Karee Venema

Should you open a CD ahead of the Fed announcement?

Demand for certificates of deposit (CDs) has been on the rise in recent years, thanks to elevated interest rates, which weighed on stock market returns and had investors seeking out less-risky options.

With the Fed unlikely to start cutting interest rates until September, now could be an ideal time to lock in attractive yields on CDs.

The difference in yields on short-term and long-term CDs is minimal at the moment, so if you do decide to open a certificate of deposit, your choice between the two could rest with how long you're able to lock up your cash.

Remember that when putting your money into certificates of deposit, you're unable to access it until the CD matures. If you do withdraw funds ahead of time, you'll be charged a fee.

Read more: Should You Get a Long-Term or Short-Term CD Before the Next Fed Meeting?

How did the economy do in Q3?

The first reading on third-quarter gross domestic product is supposed to be released ahead of Thursday's open, but we're unlikely to see it due to the ongoing government shutdown.

Still, a strong start to third-quarter earnings season tells "a good story" for GDP during the three-month period, says Scott Helfstein, head of investment strategy at Global X.

"It will be interesting to see whether the Fed will change language around the health of the U.S. economy," Helfstein adds. "Fed Chair Powell has been emphasizing the mounting risk to the labor market, but the real-time GDPNow numbers suggest growth is better than expected."

According to the Atlanta Fed, GDPNow is "a running estimate" of real gross domestic product growth based on the economic data available for that period. And the latest estimate from October 27 shows GDP growth of 3.9% – exceeding the strong GDP growth of 2.8% we saw in Q2.

- Karee Venema

Stock futures signal new highs on Fed Day

Stock futures are signaling a higher start Wednesday morning, which would put the main indexes on track to surpass the record highs hit on Tuesday.

At last check, Dow Jones Industrial Average futures were up 0.1% on strength in Nvidia (NVDA). Shares in the AI chip giant have gained more than 3% in premarket trading, putting the company on track to surpass a $5 trillion market capitalization, after President Trump said he will discuss Blackwell chips with Chinese President Xi Jinping at tomorrow's meeting.

S&P 500 futures are 0.2% higher and Nasdaq-100 futures have risen 0.3%.

"Investors are experiencing one of the most commanding momentum-driven markets since the internet," says Eric Teal, chief investment officer for Comerica Wealth Management. "The AI innovation is viewed as transformative, and the market's forward multiple is reflective of this optimism, topping 23 times."

While the bulk of these market returns have come courtesy of tech stocks, Teal notes that the "Fed easing cycle is now serving as an additional catalyst to spur valuations higher."

- Karee Venema

FHN Financial's senior economist expects a rate cut, QT announcement when the Fed meeting concludes this afternoon

"We expect the Federal Reserve will again cut the fed funds target rate by 25 basis points at the meeting this week," says Sophia Kearney-Lederman, senior economist at FHN Financial.

While the economist notes that there has been "a dearth of government data due to the federal government shutdown," she believes the central bank's assessment that downside risks to the labor market and upside risks to inflation likely haven't changed much since the September meeting.

As for the economic reports we have seen, Kearney-Lederman points to the private sector data from ADP, which hinted at continued slowing in payroll creation. And "the September CPI, the only government data to be released this month, showed inflation that remains above the Fed's target but that is not rapidly rising, with both headline and core inflation at 3.0% year-on-year."

Considering there has been little change to the labor market and inflation picture, the economist expects "the Fed to ease again as another risk management cut in support of the labor market, particularly considering the federal government shutdown adds downside risk to the labor market."

Kearney-Lederman is also in the camp that believes the Fed will formally announce the end to quantitative tightening this week, which is expected to begin in December.

"The Fed began shrinking its balance sheet in June 2022 with the intention to end balance sheet runoff when reserves were somewhat above what it judged to be ample reserve conditions," she explains. And with Chair Powell suggesting in a speech earlier this month that the end of QT "may arrive in the coming months, we think an official plan for ending QT could be announced this week."

- Karee Venema

Where can I watch Fed Chair Powell's press conference?

Fed Chair Jerome Powell's press conference will begin at 2:30 pm Eastern Standard Time this afternoon.

The presser can be viewed on the Federal Reserve's website or on the Fed's YouTube channel.

Pending home sales hold at a strong pace

Pending home sales held steady in September, matching the strong pace seen in August. Specifically, the National Association of Realtors' pending home sales index was unchanged from August, arriving at 74.8.

"Inventory has climbed to a five-year high, giving home buyers more options and room for price negotiation," says Dr. Lawrence Yun, chief economist at the National Association of Realtors. Still, "signings have yet to fully reach the level needed for a healthy market" as a weakening job market offsets a "record-high stock market and growing housing wealth."

The Northeast and South saw the largest increases in pending home sales, up 3.1% and 1.1%, respectively. The Midwest saw the largest decline, with activity down 3.4% vs August.

The "strong print in the largest regional housing market in the country, the South, could indicate that home sales will continue to improve, especially considering the recent decline in mortgage rates," says Raymond James Chief Economist Eugenio Alemán and Economist Giampiero Fuentes.

However, the economists note that "the housing market will continue to be a drag on economic activity during the next several quarters."

- Karee Venema

Nvidia stock trades above the $5 trillion market cap level

The U.S. stock market is trading in record-high territory ahead of this afternoon's Fed announcement, boosted by a rally in mega-cap tech stocks.

Nvidia (NVDA) is making one of the more notable moves today, with the semiconductor stock up 2.8% at last check, on track to become the first company to close with a $5 trillion market cap.

As for the main indexes, the Dow Jones Industrial Average is up 0.6%, the S&P 500 is 0.3% higher, and the Nasdaq Composite has added 0.6%.

Over in the bond market, the 2-year Treasury yield is up 1.2 basis points at 3.506%, while the yield on the 10-year Treasury is 1.4 basis points higher at 3.997%.

- Karee Venema

Consumer confidence continues to slip

The Fed is looking at a crunch from multiple angles as it tries to control for inflation while balancing employment data and assessing the impact of tariffs. But it's also facing political pressure, as President Donald Trump has stoked suspicion of the group's decision-making and Americans, long tired of inflated grocery prices, look for explanations. Political pressure, I should note, that Chair Jerome Powell has stalwartly denied being impacted by.

Trendlines show that consumer confidence is on a downward trajectory. As senior investing editor Karee Venema reported earlier in this blog, the Conference Board recently announced their Consumer Confidence Index reading had dropped in October, especially for those under age 35 and making less than $75,000.

More research released today, from WalletHub's Economic Index, seemed to underscore this slipping confidence. The WalletHub Economic Index reported a 9% decrease between this October and last, with a 17.6% decrease in respondents' likelihood of buying a home in the next six months and a 16.6% decrease in likelihood of buying a car in the next six months.

"It demonstrates that people are not optimistic about their financial future," said WalletHub analyst Chip Lupo. "People who have low financial confidence are likely to spend less money, make fewer large purchases, and pay down less debt than people with high confidence."

- Alexandra Svokos

The Fed has issued a rate cut

As expected, the Federal Reserve has announced a quarter-point cut.

The Fed's October decision

"The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months," the Fed said in its press release.

The Fed also decided it will no longer reduce its portfolio of securities as of December 1. The December 1 end concludes, for now, a more than three-year process of shrinking the Fed's balance sheet that began in June 2022. The Fed will still have about $6.5 trillion in its portfolio, substantially above the $4.5 trillion 10 years ago, before the pandemic.

Amongst the voting members, 10 voted in favor, while two voted against: Stephen I. Miran, President Trump's recent appointee, wanted a half-percent cut, and Jeffrey R. Schmid "preferred no change to the target range."

What does this mean for stocks?

It will be interesting to see how the market reacts while Powell is speaking.

Everyone expected the 25 basis point cut. Presumably, Wall Street will want to hear strong hints of another in December, and an open door to more in 2026.

- Jim Patterson

Reading the Fed's portfolio decision

While the overall runoff is ending, the Fed will continue to allow mortgage-backed securities (MBS) to mature. However, starting December 1, it will begin reinvesting the proceeds into Treasury securities.

This will shift the composition of its portfolio toward a higher concentration of Treasuries over the long run, consistent with its longer-term goal of minimizing its role in specific credit sectors like housing.

- David Payne

Will the rate cut bring down mortgage rates?

The end of shrinking the Fed's balance sheet seems like it ought to pull down mortgage rates, at least a little.

Shrinking it required other buyers to soak up all the Treasury debt issuance, which, all things being equal, should push up yields. So now that they have stopped doing that, I would expect that to lower bond yields, again, all things being equal.

But at the moment, the yield on the 10-year Treasury is up, not down. Not by a lot, admittedly, but still.

It's important to remember that while the Fed's decisions can influence things like savings accounts and short-term lending rates, mortgage rates tend to follow the 10-year Treasury yield more closely.

- Jim Patterson

Read more: How Does the 10-Year Treasury Yield Affect Mortgage Rates?

Chair Jerome Powell begins answering questions

Fed Chair Jerome Powell has begun taking questions at his press conference.

Asked bluntly if he is not comfortable with financial markets assuming the Fed will cut rates again at its meeting in December, Powell hedged, noting that there are "strong views" among the Fed's Open Market Committee, and that a cut is not a foregone conclusion.

He emphasized in his opening statement that the Fed faces a quandary now, with risks of bother rising inflation and rising unemployment. For now, the Fed believes the greater danger is to the labor market, which is why the Fed cut interest rates today.

But, "going forward is a different thing," suggesting the Fed could pass on cutting rates in December.

Markets have dropped a fair amount in the past few minutes, I presume in response to the "not a foregone conclusion" commentary.

- Jim Patterson

The Fed has only one tool, so have to choose only one of the between jobs and inflation goals at any one time.

- David Payne

Assessing data during the government shutdown

Asked how the Fed is assessing the labor market and the need for potential further rate cuts during the government shutdown, when normal federal unemployment data aren't being reported, Powell struck a cautiously optimistic note. He pointed to other, non-federal data, such as weekly unemployment benefit claims, that can still provide a meaningful read on the labor market.

And for now, Powell thinks those available data are not showing a significant risk of rising unemployment. He indicated that the signal suggests the labor market is holding steady, for now: "I don't want to say stable, but it's not clearly declining quickly."

If the shutdown ends soon, some of the regular data will become available, but otherwise they will have to rely on sources like the Fed's Beige Book.

- Jim Patterson and David Payne

Powell on inflation goal

Powell emphasized that the Fed is "absolutely committed" to hitting its 2% inflation goal. September's Consumer Price Index showed overall inflation running at 3%, though that was slightly less than economists had been expecting.

Powell said that, looking at the individual components of inflation, the Fed believes that current price increases linked to tariffs on imported goods are the major reason why overall inflation is notably higher than the Fed's 2% target. If — a big if — those tariff impacts fade, Powell seems to think that inflation should fall close to the 2% target that has eluded the Fed for several years now.

- Jim Patterson

Powell on other forces

When facing questions on the government shutdown, Powell seems to be trying not to criticize it. He keeps, instead, saying "data is unavailable."

He was also asked about the impact of AI, and specifically some recent layoff announcements related to AI potentially taking over jobs. Powell said AI could affect hiring or layoffs, but he doesn't see the impact on initial unemployment claims yet. He did say, though, that the Fed is concerned about a bifurcated economy, where lower income people are struggling while higher income people are pumping consumption.

- David Payne

Inflation and tariffs

Asked how much longer inflation will show upward pressure specifically due to the new tariffs that Washington has imposed on imported goods, Powell estimated that it could continue into 2026.

The impact of higher prices on imports typically takes months to work their way through to consumers, he explained. However, he added that once that process works itself out, inflation should start falling again, assuming that the tariff impact is a one-time effect, as opposed to setting off a cycle of new inflation because consumers start expecting prices to keep rising.

"This is how we believe and hope it will work out," he said. Considering how much harder the Fed's job would become if unemployment ticks up while inflation is rising, Powell was not kidding about the "hope" part.

- Jim Patterson

Powell on artificial intelligence

On the topic of artificial intelligence and whether investment in AI chips and data centers is keeping the economy afloat, Powell downplayed that concern. He acknowledged that AI spending is definitely one source of growth, but added that consumer spending overall is still strong, and that matters more than the billions tech firms are investing in AI capacity.

Powell noted that it may be primarily high-income consumers who are doing the spending these days, as folks on the lower end of the income spectrum are pulling back. And of course, those are the consumers who also tend to be the investors benefiting from the boom in AI-related stocks. If that boom turns to bust, those affluent consumers may rethink their spending habits.

- Jim Patterson

Why would the Fed not cut rates in December?

A few reasons. For one, they've already cut rates quite a lot. For another, Powell indicated different committee members have different views on what the neutral rate is (and there were two dissents in the votes this time around).

Plus, they're now 1.5 percentage points closer to neutral than they were a year ago, and some think they should wait and see for a while.

- David Payne

Overall impressions of Powell's press conference

Chair Powell's press conference has now ended, as he affirmed the Fed's decision to cut rates but stated a December cut was not a foregone conclusion. He communicated his view of the economy, despite lacking reporting due to the government shutdown, and once again avoided landmines of criticizing anyone or anything that could cause trouble. Powell indicated the Fed believes unemployment is a greater risk to the economy than inflation, at least for now, and he also indicated some concern about a bifurcated economy between lower- and higher-income people.

Spending by wealthy households "wouldn't drop sharply unless there was quite a sharp drop in the stock market," Powell said in answering whether he thought elevated stock prices are helping to prop up the economy right now. Generally speaking, the wealthy don't spend additional dollars they accrue when their portfolios gain value as readily as lower-income people do when their wages go up, he said. And in general, Powell said that the Fed does not pass judgment on whether any given level of the financial markets is right or wrong.

Still, he acknowledged that, to some extent, today's consumer spending is powered by the consumers who are doing best financially. Considering how much stocks and other asset prices have risen in the past couple of years, that seems like something to keep in mind going forward.

- Jim Patterson and David Payne

Stocks close mixed after Fed, bond yields climb

Stocks gave up early gains Wednesday after Fed Chair Powell suggested a December rate cut is "not a foregone conclusion." At the close, the Dow Jones Industrial Average was down 0.2% at 47,632 and the S&P 500 had shed 0.3 point to 6,890. The Nasdaq held on for a 0.6% gain to finish at 23,958 on strength in Nvidia.

Over in the bond market, the 2-year Treasury yield climbed 10.2 basis points to 3.596% and the yield on the 10-year Treasury rose 9.3 basis points to 4.076%.

- Karee Venema

Read more: Dow, S&P 500 Slip on December Rate Cut Worries, Nvidia Boosts Nasdaq: Stock Market Today

The latest Consumer Price Index (CPI) report showed that President Donald Trump's tariff policies have had a muted impact on cost pressures. And it all but guarantees that the Federal Reserve will cut rates again when it meets next week.

According to the Bureau of Labor Statistics, headline CPI was up 0.3% month over month in September, slower than the 0.4% rise seen in August and the 0.4% increase economists expected.

The CPI was 3.0% higher year over year, a quicker pace than the month prior. Still, the results arrived below the 3.1% increase economists anticipated.

Gas prices were the "largest factor" behind the monthly increase in headline CPI, according to the BLS, surging 4.1% from August to September. Food costs were also on the rise last month, up 0.2%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.2% month over month and 3.0% year over year. Both figures were lower than those seen in August and economists' forecasts.

"Inflation might not be slowing, but it's not surprising to the upside anymore," says David Russell, global head of market strategy at TradeStation. "The details are positive, with shelter and transportation services moderating. Some key parts of the basket are cooling even if tariffs nudge items like apparel higher."

Russell adds that the September CPI report keeps the Fed on track to cut rates by a quarter-percentage point at next week's meeting, and will likely have policymakers striking a more dovish stance moving forward

According to CME FedWatch, futures traders are now pricing in a 99% chance the Fed will issue its next quarter-point rate cut at its meeting next week. Odds for a December rate cut have risen to 97% from 73% one month ago.

While delayed by a little over a week, the BLS released today's data so that the Social Security Administration could calculate the cost-of-living adjustment (COLA). But with data collection services still suspended, it's unclear when we'll see the next CPI report.

That said, with the September CPI data now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for investors going forward.

Experts' takes on the September CPI report

"A very good inflation print, with muted impact from tariffs as expected. Gasoline prices hurt what could have been an even better number, but that is solvable. While inflation is still above target levels, this paves the way for the Fed to continue its rate-cut cycle, and further solidifies confidence in the bull market. Expect volatility on a broader trend upward in equity markets from here." – Jason Barsema, Co-Founder and President at Halo Investing

"Much like a Sherlock Holmes' story, inflation is the dog that didn't bark. So many people have been expecting a sharp increase in inflation and have positioned bearishly as a result, but the market is likely to keep squeezing the shorts until they realize that the economy – and corporate America – is more resilient than many expected." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"The CPI inflation report paves the way for the Fed to follow up its September meeting rate cut with another one next week. This will likely be a support to investors to push the stock market to new highs. Declining interest rates will grease the wheels of the economy and be a benefit to corporations and consumers." – Ross Bramwell, CFA, Managing Director of Investment Communications, Shareholder at HB Wealth

"While signs of tariff-induced inflation are apparent in select categories such as apparel and furniture, goods prices increased at a slower pace in September than August broadly. This suggests that the pass-through of higher tariffs to consumers has continued to undershoot expectations, which in turn has opened the door for the Fed to lower rates to support a cooling labor market." – Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"The Fed has telegraphed a 25 basis point cut for next week as well as another 25 basis point cut for December. With the government shutdown and lack of available data, we expect these cuts to proceed. Once the government reopens and if we start to see weak unemployment data and the unemployment rate rises precipitously towards 5%, we could expect either a 50 basis point cut for December or the Fed to communicate a string of cuts in 2026." – Skyler Weinand, Chief Investment Officer at Regan Capital

Related content

• How to Invest for Fall Rate Cuts by the Fed
• When Is the Next Fed Meeting?
• 10 Cities Hardest Hit By Inflation: Did Yours Make the List?
• An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your Retirement