At its June meeting, the Federal Reserve voted to pause interest rates in the 3.50% to 3.75% range yet again. This latest in a series of pauses has left savers in limbo.

With inflation topping 4% and most savings accounts barely keeping pace, where is the best place to stash the cash you don't need right now?

If you don't want it to lose value amid rising inflation but you also don't want to risk exposing it to the market by investing it, a certificate of deposit (CD) account is one of your best options.

But how do you choose the right term length? That really comes down to what the Federal Reserve's next move is. While a 5-year CD was your best bet in the past, with fed rates still above average while inflation was ticking downward, the uncertainty in today's economy makes those longer-term CDs less attractive.

With the outlook for both inflation and future Fed rate moves uncertain, your best bet right now is a short-term CD so you can lock in today's rate while still having flexibility to shift your cash somewhere else depending on where the market goes.

Why a short-term CD is your best after the fed meeting

Like high-yield savings accounts, CD rates generally move in the same direction as Federal Reserve policy. The difference is that a CD locks in a fixed rate for the entire term, while savings account rates can rise or fall at any time.

With many short and long-term CDs offering around 4% right now, locking in those above-average rates for as long as possible was a great idea when inflation was trending downward. But now that inflation is back above 4% and only a few savings accounts are beating it, a short-term CD, with a term of, say, six or so months, might be a better bet.

This allows you to lock in higher rates for a few months while you wait to see what happens with inflation and what kind of signals the Federal Reserve puts out about where interest rates might land by the end of the year.

If the Federal Reserve raises rates in response to stubbornly high inflation, you'll have the opportunity to lock in those new higher rates after the term is up. If inflation, instead, starts falling again, you can move your cash after those few months to a longer-term CD to lock in these rates for longer.

With that in mind, use the tool below to find the top CD rates available today:

Economic signs to watch to anticipate the future of interest rates

After stashing your cash in a short term CD, you can keep an eye on the economy in the next few months while you wait for it to mature. That way, when it does mature, you'll have a good idea of where to move your cash next to maximize your yields.

• Watch for clues as to how Kevin Warsh will change the Fed. Warsh has historically been a proponent of keeping rates higher rather than risking inflation. But some analysts speculate that he might be more likely to give in to pressure from President Donald Trump to cut rates. Keep tabs on what he says in upcoming meetings to get a sense of which way he might lean in the future.
• Keep up with the monthly CPI reports. The consumer price index released every month by the Bureau of Labor Statistics not only gives you a broad picture of how your own costs are changing, but it's an important measure of inflation tracked by the Federal Reserve. If inflation keeps going up, the Fed is likely to either keep rates paused or hike them further. If inflation slows, rate cuts might be in the future.
• Check the latest jobs reports. In addition to inflation, the Federal Reserve also closely watches employment data, including unemployment rates and wage levels, when setting its monetary policy.
• Track the 10-year Treasury yield. Especially for longer-term savings accounts, such as your CD, rates can be influenced by yields on multiyear Treasury bonds. This is also an important economic indicator to watch if you might be buying a house soon, as the 10-year Treasury yield also influences mortgage rates.

Even if you don't want to track economic indicators that closely for the rest of the year, you can stash your cash in a short term CD now and set a reminder to check in on what's going on in the market in the weeks before it matures.

From there, you can decide whether to move your cash into another short-term CD or lock in rates for longer by opting for a multiyear CD.

Related content

• Do You Have a CD Maturing Soon? Here's What to Do Next
• What the Fed's Rate Pause Really Means for Your Money
• Where to Store Your Cash in 2026
• How Much Should You Save in An Emergency Fund?

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

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

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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

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• How Inflation Affects Your Finances and How to Stay Ahead

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

For anyone navigating the 2026 housing market, the current rate volatility might feel impossible to ignore and even harder to time.

Today, mortgage rates for 30-year fixed loans are hovering around 6.44%. While many analysts, including Fannie Mae, predict rates could drop to 5.9% by year-end, geopolitical instability — specifically, the current conflict in the Middle East — has sent rates on an upward trajectory this month.

Is right now a better time to buy, or should you wait? Buying now allows you to lock in a rate before further volatility spikes. Yet, three tax signals might determine whether you can afford a home in 2026.

Are today's mortgage rates helping me buy a house?

So far, the 2026 housing market is proving more accessible than the previous two years:

• Home prices are flattening. Current forecasts by J.P. Morgan and the National Association of Realtors show a 0% to 4% appreciation, respectively. This is a significant "cool down" from recent years.
• Inventory is increasing. As rates stabilize near 6%, more homeowners are willing to list their properties and trade their low-rate houses for a new move (including retirees looking to downsize).
• Rate volatility. Until recently, rates were around 6%, which was down from last year's high of 7.01%, according to the Federal Reserve Bank of St. Louis. However, the recent tick up to roughly 6.44% is due to the U.S.-Iran conflict.

Mortgage rate increases serve as a reminder that market timing is a gamble. But your personal financial readiness might be the only variable you can control if you want to buy a house in 2026.

Signal 1: The 'tax return threshold'

Although it might seem counterintuitive to focus on the past when looking at a new home, your lender is doing exactly that. Lenders verify your last two years of tax returns to calculate your debt-to-income (DTI) ratio.

Your DTI is calculated by dividing your total monthly debt payments (from your credit report) by your gross monthly income (before taxes).

Example: If you earn $10,000 per month and have $4,000 in total debt (student loans, car payments and your proposed mortgage), your DTI is 40%.

Ideally, you want to sit at 36% or lower, though many conventional lenders accept up to 43%. Calculate what your DTI is before you ask yourself, "Should I lock in a mortgage rate now or later?"

If you need a house today and can afford it at the rate you're for which you're approved, lock it in. You might refinance your home later if the value is higher, but you can't "refinance" a missed opportunity on a home price that was within your DTI limits.

Signal 2: The 'escrow creep' indicator

A common mistake for homebuyers in 2026 is focusing solely on the mortgage principal and interest while ignoring the "escrow creep."

Review all categories of expenses that might go into your escrow account — including home insurance premiums and property taxes.

Your annual property tax bill is a good indicator of cost-of-living increases in your area. If a county has a history of aggressive reassessments, your "affordable" 2026 payment could become a burden later.

Additionally, you should only buy a home in 2026 if you plan to stay for at least five years. This gives you a good chance your home equity will grow enough to cover future closing and agent costs (if you decide to move).

If you aren't sure you'll be in the area for five years, renting might be the better option for your financial situation. (Some recent analyses suggest a 10-year runway for holding onto a home).

Finally, don't forget to factor in insurance volatility. In such states as Florida, some homeowners have seen premiums surge by about 49% in the last several years, per recent LendingTree data. If you don't bake these "hidden" costs into your DTI now, your dream home could quickly become a liability.

Signal 3: The '2026 tax perk' qualifiers

Several federal tax shifts in 2026 have changed the math on home affordability. These shouldn't be viewed as year-end "bonuses," but as part of your monthly cash flow:

• Restored insurance deductions. Starting in 2026, private mortgage insurance (PMI) premiums, FHA/USDA insurance premiums, and Veterans Affairs (VA) funding fees are tax-deductible again for buyers with an adjusted gross income (AGI) below $100,000.
• State and local tax (SALT) tax deduction cap. Under the 2025 Trump tax bill, the SALT deduction limit has increased to $40,400 for tax year 2026 (some homeowners might still be subject to the former $10,000 cap).
• Mortgage interest limits. You can continue to deduct mortgage interest on up to $750,000 of debt. For many, this could lower the "effective" interest rate of a 6.4% loan.

It's important to note that these deductions are only available if you itemize and don't claim the standard deduction.

But if you're eligible, incorporating these homeowner tax breaks alongside your projected property taxes, HOA fees, and insurance premiums, could give you a more realistic view of the "all in" home cost and whether you can truly afford your DTI mortgage rate in 2026.

The bottom line: Is 2026 a good year to buy a house?

For the prepared homebuyer, 2026 might be the best window we've seen in years. Lower rates, higher inventory and moderate price increases mean sellers might finally be ready to negotiate.

However, your first step isn't browsing Zillow — it's reviewing your 2025 tax return. Ensure your income is documented, your DTI is optimized, and you're moving to an area where the property tax and home insurance (or even maintenance repairs) won't cannibalize your savings.

The amount of your down payment and your credit score will affect home affordability in 2026, too.

Consult with a tax professional when necessary. Your personal financial situation ultimately impacts when it's time to move.

Read More

• Eliminating Property Taxes: What Homeowners Gain and Give Up
• Ways to Lower Your Property Taxes in 2026
• Homeowners Face Potential Capital Gains Tax Shift: What to Know Now
• North Carolina’s $15,000 Forgivable Mortgage: How to Qualify in 2026

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

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

Interest rates may be settling, but many Americans continue to hesitate to move to a new home, borrow money, or refinance debt.

This isn't because they're concerned about where rates are headed next. It's because they remember how quickly things changed not long ago.

When borrowing costs rose sharply over a short period in 2025, many people were left with the impression that financial conditions could shift without warning.

• Households became more guarded
• Decisions now feel heavier
• There's a strong desire to avoid making the wrong move

That caution is often reinforced by a sense of missed timing. People talk openly about wishing they had borrowed or refinanced earlier or moved cash when rates were lower or higher.

Those moments were largely outside their control, but people tend to blame themselves anyway. When every decision is measured against the past, it's easy for uncertainty to turn into inaction.

One thing that consistently helps reduce that pressure is stepping away from interest rate predictions altogether. The most durable cash plans we see are built around what an individual or family is looking to accomplish, not speculation.

Instead of asking where rates might go, people do better when they start with what their money needs to support.

Focus on the present

Clarity often comes from separating cash into roles.

• Some money is meant for regular expenses and near-term obligations
• Some is there to absorb surprises or provide flexibility when life changes
• Some is set aside for goals that don't require frequent access

When each allocation has a clear goal, people feel less compelled to reshuffle funds or second-guess every decision when rates move.

In periods when rates are drifting down but still elevated, a common source of stress is overthinking the details. Chasing the highest possible yield can make money harder to access or plans harder to manage.

On the other end of the spectrum, we see households holding on to excess cash while waiting for certainty that never really arrives.

Both approaches can quietly limit progress and keep people stuck.

The same pattern shows up with borrowing decisions. Some delay refinancing or consolidating debt because they're waiting for a more attractive rate.

But in many cases, improving monthly cash flow or reducing financial strain now would bring more relief than holding out for a slightly better number later.

What we often see is that once that pressure eases, people feel more in control and better able to focus on the rest of their financial life. Day-to-day finances become less of a constant source of stress.

It's impossible to re-create the past, even as borrowing costs come down gradually.

Instead, we recommend focusing on flexibility in the present. For room to adapt without constant worry, it's useful to balance funds across three categories:

• Readily accessible cash
• Short-term savings that provide some earnings
• Long-term investments for the future

Let go of the past

Letting go of "missed opportunity" thinking is an important mindset shift. Personal finance is rarely defined by a single moment. Progress is built over time, through a series of reasonable decisions that compound.

A choice that improves your position today still matters, even if it doesn't look perfect in hindsight.

From a wellbeing standpoint, a healthy cash approach creates a sense of calm. It allows people to pay bills, handle surprises, and plan ahead without checking rates every week or questioning every move.

That usually comes from having a plan that's clear, practical, and designed to work quietly in the background.

Interest rates will continue to change, and people can't control that. What they can control is their own money and mindset.

A cash plan built for resilience, rather than reaction, helps reduce stress and frees up energy for the parts of life that matter more than watching rate headlines.

Related Content

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• Where You Choose to Stash $100k Now Comes with a Big Opportunity Cost
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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

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• U.S. Economy Will Gain Steam This Year

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

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

Most Americans are keeping their cash in the wrong place — and they are paying for it in lost interest.

With more than $18 trillion in bank deposits right now and an average savings account rate of 0.4%, Americans are missing out on billions of dollars of interest they deserve.

With the latest Federal Reserve rate cut, and the expectation of further cuts in 2026, now is the time to make sure you are getting the best rates on your bank money — and perhaps even locking in some of those rates if the timing is right for you.

If you're not getting close to 4% on your cash, read on to learn how you can get hundreds, if not thousands more in interest each year by finding the right account, with the best rate, for you.

You're going to see two accounts you're quite familiar with, but probably not making the best use of. You're going to learn about a type of account you probably haven't used before. And I'm going to show you the number one problem I see when you start earning extra interest.

Before that, you need to remember the most important rule of investing.

The most important investing rule

The most important factor in your investment decisions is to determine when you need the money. I highlight the importance of splitting your money between short-term and long-term buckets in my book, Retire Today.

Let's break that short-term bucket into three different time frames: Right now, sooner or later.

High-yield savings accounts — for your 'right now' money

If you need money available at the drop of a hat, that's money you need right now. Perhaps you keep money in a savings account, and that's what you use to pay your mortgage or car loan. Perhaps you want your emergency fund available whenever you might need it. The best solution here is often a high-yield savings account.

What's great about high-yield savings accounts is that they are just as safe and available as the savings account at your regular bank, but often pay eight to 10 times as much interest.

In December 2024, I helped a new client move $100,000 from their bank, where it was earning 0.4% interest, to a high yield savings account that averaged 3.8% throughout 2025. They earned $3,400 in extra interest in 2025 just by clicking a few buttons.

Kiplinger keeps track of the best high-yield savings accounts each month and the top rates are still above 4%.

You deserve to get more interest on your bank money, and linking your checking account to a high-yield savings account is a great way to keep the money available yet earn much higher interest than average.

Once you have one to three months' worth of expenses set aside in a high-yield savings account, you may want to start looking for higher interest or perhaps lock in interest rates so that you're not worried about your savings accounts rates going down when the Fed cuts interest rates.

That's where your sooner money comes in with certificates of deposit (CDs).

CDs — for your 'need it soon' money

When you have more than you need in savings, it's time to start looking at CDs.

The key here is to make sure you're buying a CD based on when you need the money. Often, you'll set up CDs for money that you expect to use in perhaps six months to three to five years from now.

Kiplinger tracks CD rates each month, and you can still get roughly 4% on CDs right now. The positive with CDs is that you know what interest rate you'll be getting for a specific length of time, compared to savings account rates that could change at any moment.

The downside is that you are locked in and will likely pay a penalty for cashing in your CD early. That's why you usually don't buy CDs until you have enough in your high-yield savings account, or set up what's known as a CD ladder.

The CD ladder helps you keep higher rates in the event of Fed cuts, as well as making sure you can access money soon, without a penalty, if you need it.

After you have enough cash in your high-yield savings and CD ladder for the next few years, you may have money left over. If you don't want to invest into the stock market, you'll still want to get a high guaranteed interest rate.

That's where the next level, "need it later" money, comes in.

Multi-year guaranteed annuities — for your 'need it later' money

Chances are you have a strong opinion about the word annuity — and chances are that opinion is not based on multi-year guaranteed annuities (MYGAs).

MYGAs are quite similar to CDs in that they offer a guaranteed interest rate over a set period, but there are a few key distinctions:

• CDs are issued by banks and backed by the Federal Deposit Insurance Corporation (FDIC) at the federal level. MYGAs are issued by insurance companies and are backed by insurance guaranty associations at the state level. The coverage amounts vary per state. Make sure you research your state's guaranty coverage before buying a MYGA.
• Both CDs and MYGAs have early-withdrawal penalties, although CDs are much less severe — often only three to six months of interest as a penalty. MYGA early withdrawal penalties are often 7% to 9% of the value that you take out early. MYGAs often allow you to withdraw 5% to 10% of the value each year, if you need it, while CDs might not allow you to access any of your money early without a penalty — or perhaps just the interest you've earned that year.
• Where MYGAs shine is the interest rate, which is quite often 1 percentage point higher than you could get in a similar-length CD.

There's another caveat, and benefit, when it comes to MYGAs: They are tax-deferred, which means you delay paying taxes on the interest you earn. However, if you cash them in before you turn 59½, you pay a 10% penalty on the interest earned.

MYGAs are generally best for people who are past 59½, have plenty of readily available money in high-yield savings accounts and are willing to accept potentially higher early withdrawal penalties in exchange for the tax deferral and the higher interest rates.

Now that you're earning all this extra interest, you'll likely face a new problem – extra taxes.

More interest = more taxes

The number one problem with getting more interest is that interest-rate-type accounts often report interest, but almost never withhold interest.

One advantage of the MYGAs listed above is that they are tax-deferred, so you won't have to pay taxes on the interest until you take the money out.

However, withdrawals from annuities, including MYGAs, come with a 10% early-withdrawal penalty if you take the money out before age 59½.

The extra interest you earn from high-yield savings accounts and CDs doesn't have a 10% pre-59½ early withdrawal penalty, but you will have to report and pay taxes on the interest you earned during the year, even if you didn't use the money.

Make sure your tax preparer or financial adviser knows that you're earning extra interest from your smart money decisions this year.

They are likely to suggest that you either do quarterly estimated tax payments or withhold extra from your paycheck so that you don't end up with an underpayment tax penalty. They might even suggest you use your IRA, especially your RMD payments, to do extra tax withholding.

Three basic steps to follow

You deserve to get as much interest as you can on your bank money. Follow these three steps to get more interest and avoid a tax surprise down the line:

• Decide whether you need your money available right now, sooner or later
• Find the best interest account for when you need your money
• Plan for the extra taxes so they don't surprise you at tax time

Don't spend another year earning less than you deserve on your bank money. Who knows, maybe this year's extra interest will pay for next winter's tropical vacation.

Related Content

• Where to Stash Cash as Yields Fall, According to Advisers
• Where to Move Your Money Before the Next Fed Meeting
• Confused by Annuities? Making Sense of the Different Types
• How to Give Your Kids Cash Gifts Without Triggering IRS Paperwork
• 5 RMD Mistakes That Could Cost You Big-Time: Even Seasoned Retirees Slip Up

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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

Interest rate cuts have been at the forefront of financial conversations this year.

The Federal Reserve raised interest rates from nearly 0% to over 5% from 2022 to 2023 to help curb high inflation due to excessive spending.

The Fed is finally starting to cut rates as it grapples with still-sticky inflation amid a struggling economy with a poor job market.

These most recent cuts were anticipated, and the Fed hopes they'll make it easier for Americans to borrow money, boost the economy and increase job opportunities.

Interest rate cuts will affect your financial picture, but the impacts might be different from what you expect and might not be felt immediately.

It's important to understand the exact impact and how to help position your money for success.

Borrowing rates vs interest rates

When the Fed raised interest rates to slow excessive spending after the pandemic, borrowing rates skyrocketed, with mortgage rates reaching their highest levels since 2000.

Even though these rates have fallen slightly in the past year, borrowing rates for mortgages and cars remain high, which has led to a slower housing market.

While consumers welcome rate cuts, they won't have a direct impact on borrowing yet. These rates aren't directly tied to the Federal Reserve cuts, and mortgage rates increased from 6.31% to 7.05% during last year's interest rate cuts.

These rates are more closely tied to the treasury index, which tracks several recent treasury auctions of U.S. Treasury bills, including five- and 10-year notes.

Mortgage rates have slowly fallen to a three-year low after October's rate cut, while car loan rates have ticked up. If you hope they drop further, your wait might take longer than expected.

Timing the market is challenging. What's more important is having a solid borrowing plan in place that doesn't rely on market changes to make your housing options affordable.

Stock market returns

Historically, lower interest rates incentivize consumers and companies to spend more, which boosts the stock market.

The New York Times found that in the last seven instances since 1976 in which the Fed reduced interest rates after a six-month pause, the S&P 500 grew an average of 15.5%, above the overall average annual growth of 10.1% across the same period.

Expand that to rate cuts that occur when the S&P 500 is near record highs, and the average return over the following 12 months is 13%.

In the 12 months following last October's 25 basis points rate cut, the S&P 500 jumped over 15%.

This doesn't guarantee that we'll continue to see these gains in the next year, but it's likely to bode well for our investments.

Bonds also have an inverse relationship to interest rates. The interest rate on a bond is typically fixed throughout the life of the bond, so if the Fed drops rates, your bond's rate will remain higher, therefore more valuable relative to the market.

If we anticipate rates will continue to fall, the current bond market could become an option to reposition your money.

High-yield savings, CDs and money market accounts

Money market accounts, high-yield savings accounts and certificates of deposit (CDs) have become attractive during this period of high interest. Average returns rose in tandem with interest rates, reaching as high as 5% by the end of 2023.

If interest rates continue to fall, expect returns to continue dropping, as well.

While these accounts are safer in nature and have the ability to provide a steady return, lower interest rates mean you might want to adjust your portfolio. That could mean investing more aggressively through private equity or alternative investments.

Each investor has their own risk tolerance and might not want to invest as aggressively. In those cases, other options could include investing in dividend-focused stocks to use the dividends for income.

Interest rate cuts are an important economic factor to monitor, and they're a reminder of the importance of adjusting your financial plan on a regular basis. These changes likely won't be felt immediately, but you should include them in your long-term plans.

Consider consulting a financial adviser to help you understand how this will affect your financial plan and what moves will be right for your unique situation.

Related Content

• Kiplinger Interest Rates Outlook: Fed Cuts Rates, with More Reductions Expected
• With the Fed Rate Cut, Should You Sell Your House Now or Wait?
• Falling Interest Rates: What They Mean for Homeowners, Savers and Investors
• From Mortgages to Taxes to Estates: How to Prepare for Falling Interest Rates
• Timing Is Everything for Roth Conversions: An Expert's Guide to the Right Strategy

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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

Whether you're pleased or disappointed about the resumption of the Federal Reserve's rate-cutting cycle may depend on whether you are primarily a borrower or a saver. Regardless of where you fall on that spectrum, if you're an investor, now is a good time to review your portfolio and make some tweaks to accommodate — and capitalize — on a lower-rate regime.

The quarter-point rate cut from the Fed in September was the first since December 2024. The central bank followed this up with another one in October, and while it's too soon to call the December meeting, more rate cuts are expected in 2026.

Traders were recently betting that by next April, the federal funds rate (the interest rate that banks charge each other for overnight loans) would sink to a target rate of 3.25% to 3.5%, according to CME Group's FedWatch tool. That's a full percentage point lower than the Fed's benchmark rate in early September — two points lower than when the current monetary easing cycle began in September 2024.

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. Dating back to 1990, the S&P 500 Index has gained an average 11% in price in year two of Fed rate cuts, according to Sam Stovall, a market historian and chief investment strategist at research firm CFRA.

Zeroing in on how the market performs following a pause of several months during a rate-cutting cycle, Ryan Detrick, chief market strategist at wealth management firm Carson Group, found that since 1970, the S&P 500 has been higher nearly 91% of the time in the year following the resumption of rate cuts, returning an average 12.9%.

Of course, a lot depends on the health of the economy and whether rate cuts are occurring when a recession is imminent or underway or when the economy remains relatively healthy. Looking at the 45 rate-cutting campaigns going back to 1954, market strategists at Glenmede, another wealth management firm, found that the average S&P 500 gain over the course of the cycle was 13%; with no recession the average gain was 24.2%, and with a recession it was just 6.6%.

"We look at the economy as still on fairly firm footing," says Detrick. Although there are signs of labor-market slowing, there is also evidence of stronger-than-expected retail sales, he notes. "We have an okay economy being led by very strong corporate earnings growth. A Fed rate cut is the cherry on top, and they are likely to cut well into 2026. That's bullish for equities," he says.

Strong stock sectors for Fed rate cuts

Historically, the sectors that have performed best in the second year of rate cuts include real estate, financials, tech, health care and consumer staples, according to CFRA. That might not be the case this time around: Although Stovall currently recommends investors overweight stocks in the financial and tech sectors (as well as communications services), he has an Underweight rating on health care stocks, and he sees real estate and staples shares merely keeping pace with the market.

It's simply too early to shift into sectors traditionally considered more defensive, says Detrick. He still likes large-cap stocks in the financial, tech and industrial sectors, which have been leaders in the current bull market. "We're sticking with the ones who brought us to the dance," he says.

Nonetheless, it's a good time now, especially if you're nervous about the market's highfliers, to make sure you have some exposure to midsize- and small-company stocks, he adds, as well as international fare.

Lower rates may be the catalyst long-suffering small-cap stocks have needed. Indeed, on the heels of the September rate cut, the Russell 2000 Index, a popular small-cap benchmark, hit its first new high since November 2021 — an interval when the S&P 500 set 89 new highs, according to Stovall.

As interest rates drop, "small-cap companies are likely to benefit disproportionately," note the strategists from Glenmede. That's because more than half of small-cap debt is issued at floating rates. "As interest expenses fall," they say, it "should provide a meaningful tailwind to earnings."

Moreover, small firms should see a more sizable benefit from corporate tax relief, while also being less exposed to the impact of tariffs than large companies, according to Glenmede. And despite the recent rally, valuations remain compelling compared with their blue-chip cousins. "Small- and mid-cap stocks could have a very long runway — well into 2026, we think," says Detrick.

A good way to add more exposure to mid- and small-cap stocks is with the iShares Core S&P Mid-Cap ETF (IJH) and the iShares Core S&P Small-Cap ETF (IJR). Both exchange-traded funds are members of the Kiplinger ETF 20, the list of our favorite ETFs. (Prices, returns and other data are as of September 30.)

Step away from cash

You've no doubt noticed that your cash is earning less. But further deterioration in the economy — continued weakness in the job market, say — could send cash yields to the basement. "The imperative to put cash to work is increasing," say strategists in the chief investment office at UBS Financial Services.

For short-term spending needs, stick with the modest yields on certificates of deposit and money market funds, they advise. For expenses that are one to three years away, consider a bond ladder, with IOUs of staggered maturities.

Cash earmarked for needs up to five years out can be invested in intermediate-term government or investment-grade corporate bonds, according to UBS. Baird Aggregate Bond (BAGSX), a longtime member of the Kiplinger 25, the list of our favorite actively managed no-load mutual funds, yields 3.9% and has ranked in the top half of similar funds in seven of the past 10 years.

Or, recommends UBS, consider a multi-sector bond fund, whose managers can pick and choose among a wide array of fixed-income assets.

One to explore is the Pimco Multisector Bond Active ETF (PYLD). The ETF, with a yield of 5.1% and a total return of 7.0% over the past 12 months, had a hefty stake in securitized assets (think pooled mortgage loans and the like) at last report.

Finally, investors looking to replace regular income from cash, and who can tolerate the higher risk of stocks, can seek out dividend payers, such as those found in the Kiplinger Dividend 15, our favorite dividend-paying stocks.

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.

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All eyes have been on the Federal Reserve Board lately. The path of interest rates is top of mind as the Fed continues to navigate its dual mandate of keeping inflation in check and maintaining full employment, amid worries about strengthening in the former and weakening in the latter. Expect interest rate cuts this year and next, with decisions on how many and how far still taking shape.

The larger question is about the path of the institution itself, as worries surface about the politicization of a central bank prized for its independence. President Donald Trump has excoriated the Fed, particularly Fed Chair Jerome Powell, for being “too slow” to cut interest rates — a move Trump believes will help ease the burden of federal deficits, as well as goose the economy overall and the housing market in particular. Though Trump has threatened, he has not tried to remove Powell.

But Trump has moved to fire Fed governor Lisa Cook, after a chief housing regulator accused her of mortgage fraud. The Justice Department has reportedly opened a criminal investigation into the matter. Cook has fought back with a federal lawsuit that seeks to confirm her status as a Fed governor and “safeguard her and the Board’s congressionally mandated independence,” according to the suit. Legal arguments hinge on whether Trump can fire Cook “for cause.” A U.S. District Court ruling keeps Cook on the board for now, but the case could wind up at the Supreme Court.

Meanwhile, Trump picked the chair of his Council of Economic Advisers, Stephen Miran, to serve out the term of a Biden-appointed governor who recently announced an early retirement.

“If the president succeeds in removing Governor Cook, we expect that he may secure a four-to-three majority of governors whose policy ideas align with his, and this has potential implications,” says Paul Christopher, head of global investment strategy at research firm Wells Fargo Investment Institute. “Specifically, a majority of governors might guide policy toward greater deregulation and much lower interest rates (and possibly higher future inflation) than the current Fed leadership has proposed.”

The Fed governors also approve the Reserve Bank presidents who take turns sitting on the committee that determines monetary policy, amplifying the power of the majority.

In the central bank’s 112-year history, no president has ever removed a Fed governor. “One reason America has been viewed as having an exceptional economy and capital markets is because of the independence of the Fed,” says market strategist Ed Yardeni, who authored a book about the Federal Reserve.

For now, weakening jobs data have all but guaranteed lower rates. The most recent Labor Department report showed more evidence of a moribund summer and “should cement a shift in the Fed’s thinking from worrying about inflation to worrying about labor weakness,” says BofA Global Research economist Aditya Bhave. BofA forecasts a series of Fed rate cuts totaling 1.25 percentage points by the end of 2026.

It’s worth noting that the Fed controls short-term rates but not long-term rates. Long-term bond yields have recently fallen precipitously, but that’s not always the case, even when the Fed is cutting. Last year, the Fed cut short-term rates by one percentage point, while 10-year Treasury yields rose a percentage point over roughly the same period.

“We could have a situation like 2024, with the Fed lowering rates and bond yields going up,” says Yardeni, who adds: “The administration seems to be making progress toward having a lot of political influence over monetary policy — but they don’t control the bond market.”

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.

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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

The ripple effects of each Federal Reserve meeting reach far beyond Wall Street. They shape the rate on your mortgage, the growth of your savings, and even the value of long-term investments.

Ahead of the September Fed meeting, mortgage rates dropped to their lowest level since October 2024. The average 30-year fixed rate slipped below 6.5% for the first time in months, thanks to cooling inflation and growing confidence that the Fed may begin cutting rates in the coming quarter.

The reaction was immediate: refinance applications spiked nearly 60% last week — the sharpest increase in more than two years. As rates shift, understanding who stands to benefit and who may lose ground is the first step in adjusting your financial strategy.

The big winners: Homeowners and buyers

Falling mortgage rates are a welcome break for homeowners who took out mortgages during the peak-rate periods of 2022 and 2023. For those with rates above 7%, today’s environment opens the door to consider refinancing into lower monthly payments.

That relief can free up hundreds of dollars per month, offering a much-needed buffer against other rising costs like groceries, insurance and energy.

Homebuyers also stand to benefit, at least in theory. Lower rates slightly boost affordability by reducing monthly payment burdens, making it easier to qualify for a mortgage. However, inventory remains tight in many markets, and prices are still elevated. This means buyers may find some relief but not a complete reset of the housing affordability crunch.

Curious about today's rates? Explore and compare some of today's best offers with the tool below, powered by Bankrate:

The losers: Banks, investors and savers

Not everyone wins when rates fall. Banks and investors holding older mortgage-backed securities (MBS) face losses as new loans enter the market at lower yields. As older, higher-interest loans get refinanced, the value of those securities drops, reducing bank profitability and potentially affecting investor portfolios with heavy exposure to mortgage debt.

Savers, too, may feel the downside. If the Fed signals a pivot to rate cuts in response to softening inflation and economic data, banks will likely lower yields on CDs and high-yield savings accounts.

For consumers relying on those accounts for a reasonable return, the recent gains in interest income may start to decrease. The era of 5% savings rates could be short-lived if broader rate cuts materialize.

Browse some of today's best savings account offers with the tool below, powered by Bankrate:

What it means for your financial strategy

When interest rates shift up or down, it sends a ripple effect across nearly every aspect of your personal finances. That’s especially true when mortgage rates move sharply. If you're a homeowner, a buyer, or someone with money in savings, now’s the time to pause and ask: What should I do differently?

Here are a few options to consider.

Refinance math: When it makes sense.

If you have a mortgage with an interest rate at least one percentage point higher than current offerings, now is the time to run the numbers. Just make sure you factor in closing costs, loan term changes and how long you plan to stay in the home. Refinancing isn’t always a slam dunk, but for many, it could mean real monthly savings.

Diversifying savings if yields fall.

If CD and high-yield account rates start to decline, look into laddering strategies or short-term Treasury bills to lock in higher yields while they last. Consider moving a portion of savings into I-bonds or other inflation-protected assets if you’re worried about losing ground.

Big picture: why every rate move creates both opportunity and trade-offs.

Whether you’re a homeowner, a saver or an investor, every rate change reshapes your financial landscape. With another decision coming in October, now is the time to revisit your strategy, weigh the trade-offs between borrowing and saving and make adjustments that support your long-term goals.

Falling mortgage rates can provide relief for homeowners and buyers but they also bring challenges for savers and financial institutions. Instead of seeing these shifts as purely good or bad, treat them as a signal to reassess and realign your money decisions.

Related Content:

• My Mortgage Rate is 6.5%. Should I Refinance If Rates Fall By Half a Point 
• Find the Best 30-Year Mortgage Rates Today
• How Much Does It Cost to Refinance a Mortgage and Other Questions to Consider

There's growing speculation that the Federal Reserve might start lowering interest rates later this year or next.

While no one can precisely predict when, it's useful to consider how a lower rate environment could influence financial decisions related to housing, estate planning, taxes, investing and retirement.

Housing

Housing is often the most noticeable area affected by falling rates. A rate drop isn't a magic solution for your housing plans, but it is an opportunity to reset and gain flexibility.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

If mortgage rates decrease, mobility may increase, giving more families the freedom to buy, sell or relocate.

However, it's important to keep in mind the broader financial implications of moving, such as property and casualty insurance costs and availability.

Adjustable-rate mortgages (ARMs) taken out in 2021 or 2022 are nearing reset, and although refinance rates may not be as low as they were then, they still appear more favorable than current levels.

For some households, tapping into home equity via a HELOC might also be a smart option if borrowing costs decline.

What you can do: Review your mortgage and debt. If you have an ARM or other variable-rate debt, think about refinancing to a fixed rate while rates are still historically favorable.

A lower rate could also make it a good time to consider using home equity through a HELOC for planned expenses or debt consolidation.

Estate planning

Estate planning becomes more relevant in a lower-rate environment. Strategies like grantor retained annuity trusts (GRATs) and intrafamily loans become more effective when the IRS' Section 7520 rate drops.

It's easier to shift appreciation out of an estate when the so-called "hurdle rate" is lower, which can help preserve wealth for future generations.

What you can do: Reassess your estate plan. If you're a high-net-worth individual, consult with your estate planning attorney about strategies like a GRAT.

These become more effective when the IRS 7520 rate (a benchmark for trust asset valuation) is lower, enabling you to transfer more wealth to heirs tax-free.

Tax planning

Falling interest rates can suggest slowing inflation. Since federal tax brackets and the standard deduction are indexed to inflation, slower growth may lead to smaller upward adjustments. This could place more income into higher tax brackets.

Simultaneously, lower borrowing costs often boost asset values, increasing capital gains exposure — a beneficial challenge if managed carefully.

Lower rates may also encourage more charitable giving. Certain planned giving strategies become more advantageous if rates are lower.

For example, a charitable lead trust (CLT) might become more attractive than a charitable remainder trust.

It's worth noting that starting next year, a provision in the One Big Beautiful Bill (OBBB) will reduce the deduction for households in the highest tax bracket from 37% to 35%, so timing is critical.

What you can do: Analyze your tax strategy. A lower-rate environment may boost asset values, increasing exposure to capital gains taxes — a positive problem to have. Consider strategies like tax-loss harvesting to offset gains.

For charitable giving, a CLT might be more appealing, as lower rates reduce the gift tax value of the remainder interest.

Investing

In a lower-rate environment, diversification isn't just a strategy — it's your best defense.

Investments tend to respond strongly to changes in interest rates. Historically, large-cap stocks perform well when rates decline.

Companies benefit from cheaper borrowing, and investors often shift from bonds to stocks when yields fall.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth (soon to be called Adviser Intel), our free, twice-weekly newsletter.

Nonetheless, diversification remains essential. While yields on new bonds may reset lower, the value of existing fixed income holdings typically rises.

Managing reinvestment risk alongside opportunities makes portfolio management more important than ever.

What you can do: Examine your asset allocation. While declining rates may favor equities, they also reduce yields on new bonds.

Ensure your portfolio balances growth-oriented assets (like stocks) with stable, income-producing assets (like bonds) to reduce longevity risk and support your long-term goals.

Retirement planning

Retirement planning also needs attention in a declining rate environment. Lower yields can make conservative portfolios more vulnerable, underscoring the importance of including growth assets that support long-term objectives.

A proper mix of fixed income stability and equity growth helps mitigate longevity risk in a world where bonds alone may no longer suffice.

What you can do: Update your retirement projections. Lower bond yields can impact the income from your retirement portfolio.

Run new projections using a more conservative income assumption from fixed-income assets to keep your spending plan sustainable.

Adjust your savings rate or portfolio mix as needed.

Putting it all together

The potential of falling interest rates isn't a signal to overhaul your entire financial plan, but rather an opportunity to review and refine it. A proactive approach is vital.

By understanding how these changes could impact your housing, estate, tax and investment strategies, you can position your finances to benefit from the new environment.

The shift toward lower rates highlights the timeless importance of a well-diversified portfolio and a long-term perspective. While short-term market reactions may grab headlines, the true measure of a sound financial plan lies in its resilience and adaptability.

I often remind clients that the goal isn't to predict the future but to prepare for it, whatever it may bring.

Related Content

• I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your Wallet
• The Smartest Places to Keep Your Cash If Rates Drop in 2025
• How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2025
• You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term Care
• Will My Children Inherit Too Much?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The September Fed meeting concluded this afternoon with the central bank's latest policy decision.

Following a recent string of weaker-than-expected jobs data, the central bank cut rates by a quarter-percentage point, as was widely expected.

Wall Street also be tuned into the Fed's release of the Summary of Economic Projections (SEP), or "dot plot," which showed that central bankers expect the federal funds rate to be lower at the end of this year than they forecast in July.

And Federal Reserve Chair Jerome Powell's press conference was also a lively event, though he repeatedly rebuffed efforts to have him comment on politics.

The Kiplinger team reported live on the September 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 | How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2025 | Who Will Replace Jerome Powell as Fed Chair?

President Trump's tariff policies are having a moderate impact on inflation

The August Consumer Price Index report showed that President Donald Trump's tariff policies continue to have a moderate impact on price pressures, but the Federal Reserve is still expected to lower the federal funds rate when it meets next week.

According to the Bureau of Labor Statistics, headline CPI was up 0.4% month over month in August, higher than the 0.2% rise seen in July and the 0.3% increase economists expected.

The CPI was 2.9% higher year over year, a quicker pace than the month prior and the largest annual increase since January. Still, the results arrived in line with estimates.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.3% month over month and 3.1% year over year. Both figures matched what was seen in July and were on par with economists' forecasts.

"Despite August's small upside surprise, the reality is that consumer price changes have continued to surprise to the downside (relative to economists' expectations)," says William Blair macro analyst Richard de Chazal, CFA. "We are also only seeing limited pass-through from the tariffs."

Chazal adds that "companies are absorbing some of the costs, as well as passing them further along the supply chains, before they reach the end consumer." So while consumer inflation expectations are higher than the Fed would like, the central bank is more focused on a weakening labor market than a sustained inflation surge, he notes.

- Karee Venema

Related: Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts Say

A weakening labor market is worrying the Fed

A number of economic reports has the Federal Reserve concerned about the labor market.

Most recently, Thursday's release of weekly jobless claims, which climbed by 27,000 in the week ending September 6, to a seasonally adjusted 263,000. This is the highest level since October 2021.

Bill Adams, chief economist at Comerica Bank, says this particular initial claims update "should be taken with a larger-than-usual grain of salt" given the volatile nature of the data and the fact that the latest update coincided with the Labor Day holiday and the start of the school year.

"Even so," he notes, "after the downward revisions to payrolls announced earlier this week and the weak jobs report for August last week, the job market is looking the wobbliest since the pandemic."

As for that August jobs report, the Labor Department recently said that nonfarm payrolls rose by 22,000 in August, missing economists' estimate for 75,000 new jobs. Figures for June were revised down by 27,000, from adding 14,000 to losing 13,000, while July job growth was upwardly revised by 6,000 (from 73,000 to 79,000 additions).

With these revisions, the U.S. added 21,000 fewer jobs in June and July than previously reported.

The unemployment rate, which is calculated from a separate survey, ticked up to 4.3% from 4.2%.

The data "underlines the growing downside risks to the labor market," says Simon Dangoor, head of Fixed Income Macro Strategies at Goldman Sachs Asset Management. "Hiring is running close to stall speed, and the breadth of jobs gains remains poor."

Dangoor adds that while slowing supply growth – due in part to reduced immigration – "is mitigating upward pressure on the unemployment rate, the Fed is acutely aware that a low-demand, low-supply equilibrium is fragile and vulnerable to deterioration."

- Karee Venema

Fed meeting schedule for 2025

The next Fed meeting, which runs from September 17 to 18, marks the sixth gathering of 2025. That means there are two 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

Some good news on the inflation front?

This week also brought an encouraging reading on wholesale inflation. Ahead of Wednesday's open, the Bureau of Labor Statistics said the Producer Price Index (PPI), which measures what businesses are paying suppliers for goods, fell 0.1% from July to August – coming in below economists' estimates for a 0.3% rise. Year over year, PPI was up 2.6%.

"The better-than-expected and relatively benign producer price report is both good news and bad news," says Scott Helfstein, head of investment strategy at Global X. "On the positive side, tariffs are not having a drastic impact on company supply chains in aggregate. Alternatively, the slowing in producer inflation could also signal a softening economy."

He goes on to say that inflationary pressures are not impacting producers right now and input costs appear to be contained. And the areas that did see increases in goods pricing were tied to the consumer staples sector, including food, tobacco and certain electronics segments.

"There were a few catalysts for higher prices in services with transportation costs and apparel being notable standouts," Helfstein says.

While he notes that the Fed is likely to take notice of the data, it will not shift the odds for a rate cut next week.

- Karee Venema

Fed rate cut incoming

Weak job gains during July and August, plus a forthcoming revision that lowers employment numbers going back to April of last year, will change the Fed's default position from one of standing pat to one of cutting short-term interest rates a quarter point at a time, starting with next week's policy meeting on September 17.

Inflation is still higher than the Fed would like, but Chair Powell has emphasized that the Fed has a dual mandate from Congress: not just to maintain low inflation, but a good economy as well. At the moment, it looks like the latter has become a greater concern than the former, and thus is the priority.

- David Payne

The smartest places to keep your cash when rates drop

The Kiplinger personal finance team is of course always following trends in savings vehicles, looking for opportunities and strategies for our readers. With an expected rate cut after months of stasis, this is a key time to get your cash in order. Even if you're not actively saving up, chances are you have spare funds to store that you don't necessarily want to put into the stock market, whether it's because you're holding it for a house project, vacation or emergency fund, or just don't like risk in your portfolio.

Personal finance writer Sean Jackson has been beating the drum for CDs in the lead-up to this September Fed meeting. With a CD, you lock in a rate for its entire lifetime, meaning that even if savings rates drop after the meeting, your CD rate will remain the same. In this article, he shares the best CDs he's found this week — as well as his advice on where not to put your cash.

Read more: The Smartest Places to Keep Your Cash If Rates Drop in 2025

- Alexandra Svokos, digital managing editor

Miran could be confirmed to the Fed board as soon as Monday

The Senate could vote to add Stephen Miran, a White House economic adviser, to the Federal Reserve's Board of Governors as soon as Monday, according to some media reports.

President Trump tapped Miran to fill the seat vacated by Adriana Kugler, who unexpectedly resigned last month.

By a vote of 13-11 along party lines, the Senate Banking Committee on Wednesday advanced Miran's nomination to the Senate floor. Republicans are rushing to get Miran confirmed ahead of the start of the Fed's September meeting.

If confirmed, Miran will serve out the remainder of Kugler's term, which is set to expire on January 31, 2026.

- 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?

Keep an eye on Powell's presser and the FOMC's quarterly forecasts

Looking beyond the FOMC's September 17 policy announcement, Chair Powell's post-meeting press conference and the accompanying new policy committee forecasts may give clues as to whether the members consider the labor market slowdown to be the result of a weakening economy or caused more by immigration tightening and deportations. FOMC members would be more likely to cut more frequently if it were a result of a weakening economy.

It will also be interesting to see whether members consider the higher inflation as temporary, linked to tariffs, or in danger of becoming more sticky as consumer, worker and business expectations shift. Members would also be more likely to cut if they feel it's temporary.

- David Payne

Consumer sentiment slips in September

The University of Michigan on Friday said its Consumer Sentiment Index fell 4.8% from August to September, to 55.4. The index is down 21% year over year.

"This month’s easing in economic views was particularly strong among lower and middle income consumers," says Surveys of Consumers Director Joanne Hsu. "Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation."

She adds that while several consumers mentioned tariffs during interviews, sentiment remains above the lows seen in April and May after the Trump administration announced reciprocal tariffs.

The report also showed that year-ahead inflation expectations were unchanged from August, at 4.8%, while long-run inflation expectations ticked up to 3.9%.

"Consumers are becoming even more pessimistic about the economy," says Bill Adams, chief economist at Comerica. "There's still some time until the start of the holiday spending season, but the setup looks disappointing for consumer-facing businesses as of today."

As for the Fed, Adams points out that it is being "pulled in opposite directions" by rising inflation and a weak labor market. "Chair Powell signaled at his speech to the Jackson Hole monetary policy conference that he favored 'careful' adjustments of interest rates given those competing pressures."

Comerica, he adds, expects a quarter-point rate cut this Wednesday. And while "the Fed can be expected to cut rates further in coming months; the question is how much, not if," the economist says. "If Powell reiterates the 'proceed carefully' language he used at Jackson Hole in the post-meeting press conference, it will signal that he favors a pause in rate cuts at the October decision (barring further deterioration in the economic data)."

Adams notes that it "will be worth watching for a gap between the FOMC statement's guidance, which represents the consensus view of all FOMC members, and Chair Powell's own statements in the press conference, which reflect his personal view."

- Karee Venema

Stocks closed mixed ahead of Fed week, notch weekly gains

The main indexes closed mixed Friday. While the Nasdaq Composite (+0.4% at 22,141) managed to notch a new record high, the S&P 500 (-0.05% at 6,584) and the Dow Jones Industrial Average (-0.6% at 45,384) were not so resilient.

It was a strong week overall for the U.S. stock market, though, with the Nasdaq, S&P 500 and Dow adding between 1% and 2%.

- Karee Venema

Read more: S&P 500 Slips Ahead of Fed Week: Stock Market Today

What will the dot plot reveal?

It's all but certain that the Fed will cut interest rates this time around. This meeting will also include the release of the central bank's Summary of Economic Projections (SEP), or "dot plot," which summarizes where each member expects monetary policy to be going forward.

In June, the Fed's dot plot indicated expectations that the federal funds rate would be lowered to 3.9% by the end of 2025 – suggesting two quarter-point rate cuts this year.

But following several data points – including the August jobs report – that showed a notable slowdown in the labor market, many are expecting the Fed to cut at each of its three remaining meetings.

The June SEP also implied expectations for slightly slower economic growth, higher unemployment and an uptick in inflation compared to what was forecast in March.

Barclays economists think the SEP will "show little change in economic projections, other than upward revisions to real GDP growth and a small downward revision to 2025 inflation."

However, they expect "the median dots to show three 25 basis-point cuts this year, to 3.6%, one cut in 2026 and one in 2027, as well as an unchanged longer-run dot at 3.0%."

- 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 less than a year from now – 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.

Earlier this month, Treasury Secretary Scott Bessent began meeting with potential replacements for Chair Powell, including former Fed officials Lawrence Lindsey, Kevin Warsh and James Bullard.

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

A jumbo rate cut in September is unlikely

The odds of a jumbo rate cut have risen over the past month or so amid signs of weakening in the labor market.

According to CME FedWatch, the probability of a 50 basis-point rate cut is currently at 6.6%, up from 5.7% a month ago and zero before that.

But Jonathan Millar, senior U.S. economist at Barclays, says that it's doubtful the FOMC will lower the federal funds rate by a half-percentage point.

"Incoming data portray a slowed labor market that is not collapsing, and still-gradual upward price pressures from tariffs," Millar writes in a note. "Even with Stephen Miran likely injecting a dovish voice next week, the Fed seems on course for sequential 25 basis-point rate cuts through end-2025, with jumbo cuts unlikely."

- Karee Venema

CPI release dates for the remainder of 2025

The Consumer Price Index (CPI) report for August was released the morning of Thursday, September 11, giving the Federal Reserve the last look at inflation ahead of its September meeting.

The next CPI report, which will show data for September, will be released ahead of the open on Wednesday, October 15.

The CPI for October will be released on Thursday, November 13, while the final CPI release date in 2025 – for November's data – is on Wednesday, December 10.

You can access the full calendar for CPI report release dates at the Bureau of Labor Statistics.

- Karee Venema

Wells Fargo economists expect a quarter-point rate cut

Wells Fargo senior economists Sarah House and Michael Pugliese are among those anticipating a quarter-point rate cut Wednesday afternoon.

"A more precarious picture of the labor market has become apparent since the FOMC last met in July," the two wrote in a recent note, though adding that the unemployment rate (4.3%) is "at the top end of the FOMC's range consistent with 'full employment.'"

House and Pugliese note that "policy easing this year has been delayed due to inflation. Reflation in the goods sector alongside slower services disinflation has kept core PCE running about one percentage point above the 2% target."

However, they add that "the outlook for inflation has been little changed over the past six weeks."

What the economists don't anticipate is for Powell & Co. to signal any additional rate cuts beyond September so that the committee can maintain "flexibility to reduce the policy rate again at its next meeting on October 29 or proceed with additional easing more slowly."

- 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, September 17.

"Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year," the committee wrote in its July statement. "The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated."

This time around, Deutsche Bank economists expect the statement to "reflect the risk management concerns around the labor side of their dual mandate flagged by Chair Powell at Jackson Hole."

As such, they anticipate changes to the opening paragraph to note that job gains have slowed and the unemployment rate, while still low, has moved up. "This would be a clear downgrade from the July meeting statement's characterization of labor market conditions as 'solid.'"

The group will also be watching for potential dissents from committee members. "We expect Stephen Miran, who appears set to be approved by the Senate next week before the meeting, to dissent in support of a 50 basis-point reduction," they write in a note to clients, adding that Governors Bowman and Waller could also issue dovish dissents.

"There could also be hawkish dissents to a 25 basis-point rate cut," they add, potentially from Kansas City Fed President Jeffrey Schmid and/or Chicago Fed President Austan Goolsbee.

- Karee Venema

August retail sales data will be released on Tuesday

While the September Fed meeting is the main event on this week's economic calendar, Wall Street will also be tuned into Tuesday morning's release of the August retail sales report.

The data give investors and economists an important look at inflation and consumers' ability and willingness to spend money.

"Total retail sales (excluding restaurants) rose a strong 0.7% in July, while core retail sales (which also exclude gas and autos) picked up by a moderate 0.3%," writes Kiplinger staff economist David Payne in the Kiplinger Retail Outlook. "The four-day Amazon Prime Day promotion in July likely boosted consumer spending. The underlying trend would have been weaker without the sale."

For August, BofA Securities economist Aditya Bhave expects retail sales to come in strong, "which should keep alive the conundrum of solid spending and weak labor data."

Bhave cites solid credit card data, which showed that "spending growth was broad-based across sectors, and favorable seasonal factors."

The economist expects "a solid +0.7% and +0.8% for retail sales ex-autos and the control group."

- Karee Venema

Waiting for a cut

The main U.S. stock market indexes are poised to rally at the start of Fed Week, with futures in the green across the board 30 minutes before the opening bell at the New York Stock Exchange.

The Nasdaq Composite closed at an all-time high Friday, and though the S&P 500 and the Dow Jones Industrial Average were down at the end of last week they're still hovering near their own recent fresh peaks.

According to CME FedWatch, the probability the Fed cuts the target range for the federal funds rate by 25 basis points is 96.4%, up from 89.4% a week ago. Odds of a double cut have moved to 3.6% from 10.6% last Monday.

But the probability of a 50-basis-point move was 0.0% a month ago. And President Donald Trump has put his thumb on the scale in favor of taking the target range for the fed funds rate to 3.75% to 4.00%.

"I think you have a big cut," President Trump told reporters Sunday. "It's perfect for cutting." Trump has been pressuring Fed Chair Jerome Powell to cut interest rates for months.

The president is not alone, though. Renaissance Macro Research Head of Economics Neil Dutta thinks a double-cut is warranted too.

"I think it's going to be very, very challenging for the Fed to deliver what's embedded in market pricing," Dutta explains. "The market thinks the Fed is going to be at neutral two years before the Fed itself sees itself at neutral."

By "neutral" Dutta means the "neutral interest rate," the theoretical level for the federal funds rate that neither stimulates nor restricts economic growth while supporting price stability and full employment.

– David Dittman

It's a big week for central banks and interest rates

"Policymakers have shown a clear bias to ease policy further, but were waiting for the data to justify a move. The August employment report was likely enough to satisfy that need, even as inflation remains well above target." Sounds about right, seems reasonable ahead of the next Fed meeting…

And if you're tracking the multitude of central banks meeting this week to discuss monetary policy, you have your forecast for the Bank of Canada from BMO Capital Markets Canadian Rates & Macro Strategist Benjamin Reitzes.

Like the Federal Open Market Committee, Canada's central bank is expected to announce an interest rate cut, only earlier on Wednesday, at 9:45 am Eastern Standard Time.

"The Bank of Canada is expected to cut policy rates 25 basis points to 2.50% on September 17 after staying on hold at the prior three meetings," Reitzes writes.

The Bank of England is scheduled to announce its next policy move at 7 am EST Thursday morning. The BoE is expected to hold rates steady.

The Bank of Japan is also expected to keep its current policy rate in place at the conclusion of its meeting this week.

The BoJ does not have a fixed schedule but usually announces interest rate decisions around midday local time, or between 10:45 pm and 12 midnight EST. The market expects its next move to be a hike.

The BoJ will close out an active week during which policy rates for four of the Group of Seven industrialized nations, five of the 10 most-traded currencies in the world and approximately 40% of the global economy will be set.

North American monetary policymakers confront similar circumstances, as Reitzes explains, including "ongoing elevated uncertainty around the outlook for the economy and inflation" as well as "deteriorating labour market" conditions.

You can apply his conclusion to Fed Chair Powell press conference too: "Listen to the tone from Governor Macklem to assess whether the Bank is keen on cutting in back-to-back meetings and for any clue on how stimulative they’d like policy to be."

– David Dittman

President Trump is still trying to fire Fed Governor Cook

President Donald Trump has appealed a ruling by a lower court to impose an injunction that prevents him from removing Lisa Cook from the Federal Reserve Board of Governors for the time being. He still wants to fill a voting spot on the FOMC before the next Fed meeting.

A decision from the U.S. Court of Appeals for the D.C. Circuit is expected on Monday. Cook has challenged Trump's attempt to fire her over allegations of mortgage fraud.

U.S. District Court Judge Jia Cobb ruled last week that claims by Federal Housing Finance Agency Director Bill Pulte and referred to U.S. Attorney General Pam Bondi is not "cause" sufficient to justify Cook's removal under U.S. law.

"The public and the Executive share an interest in ensuring the integrity of the Federal Reserve, and that requires respecting the President’s statutory authority to remove Governors 'for cause' when such cause arises," lawyers for the White House argue in their brief.

According to Cook's brief, the Fed governor's removal would "mark an immediate end" to central bank independence from the executive branch and "send a destabilizing signal to the financial markets that could not be easily undone."

Markets are broadly higher as of midday, with the Nasdaq Composite and the S&P 500 firmly in positive territory but the Dow Jones Industrial Average held under by a few big names.

The yield on the 2-year U.S. Treasury note, a basic indicator for the short-term direction of Fed policy, was down to 3.535% from 3.558% Friday. The yield on the 30-year U.S. Treasury bond, considered a bigger-picture barometer, was down to 4.645% from 4.679%.

– David Dittman

Will Stephen Miran serve at the Fed (and in the White House)?

The Senate could confirm Stephen Miran's nomination to serve on the Federal Reserve Board of Governors as early as today.

President Trump nominated Miran, currently the chairman of the Council of Economic Advisers, to complete the term of former Fed Governor Adriana Kugler. Kugler left before the January expiration of her 14-year term to return to a teaching post at Georgetown University.

Miran has been a key voice in the White House during the topsy-turvy rollout of President Trump's tariffs. Miran said that, if confirmed to serve on the Fed board, he would take an unpaid leave of absence from his role as a White House economic adviser.

During his confirmation hearing, Sen. Jack Reed of Rhode Island asked Miran whether he would resign from the Council of Economic Advisers if he's confirmed as a Fed governor.

"I have received advice from counsel that what is required is an unpaid leave of absence from the Council of Economic Advisers," Miran said. "And so, considering the term for which I'm being nominated is a little bit more than four months, that is what I will be taking."

– David Dittman

How Powell and the market see the employment situation

The August jobs report is what caused the odds of a jumbo 50-basis-point move on interest rates at the next Fed meeting to jump off zero to above 10% as recently as last Monday.

That probability has settled down to 4.0%, even after major downward revisions to recent jobs growth data.

The big question is how Fed Chair Jerome Powell and his colleagues on the Federal Open Market Committee see the employment situation right now. But, also, where is inflation going from here? And, bottom line, what does all of it mean for the federal funds rate?

Still, despite the fact that we just saw the biggest revision to jobs data ever, 911,000 fewer new jobs were created from April 2024 through March 2025, and there are now more unemployed people than job openings, as Ritholtz Wealth Management Director of Institutional Asset Management Ben Carlson notes, the S&P 500 made three new all-time highs last week.

The broad-based index has made 24 new highs this year and 43 over the trailing 12 months. "The stock market doesn't care about the labor market… yet," Carlson notes.

Indeed, BMO Capital Markets Chief Investment Strategist Brian Belski broke down 10 rate-cutting cycles since 1982, "when the Fed started officially announcing its policy actions."

According to Belski's analysis, the S&P 500 posted positive returns over the 12 months after a resumption of rate cuts in eight of the 10 cycles, with an average gain of 10.4%.

Belski has a big "however":

[T]he macro context behind the moves mattered a great deal, which is why performance varied so significantly around these turning points ranging from -23.9% to 32.1%. In cycles where rate cuts were able to prolong economic expansion and keep corporate earnings on an upward trend, stocks performed quite well. However, in cycles where monetary stimulus was unable to prevent an economic downturn (i.e., 2001 and 2007), stocks recorded significant losses in the following year as earnings growth struggled.

As Sam Ro of TKer says, "Yes, the Fed can have an impact on economic activity. But what ultimately matters for markets is where the economy and corporate earnings head."

– David Dittman

It's a risk-on start to Fed Week

All three main U.S. equity indexes closed higher Monday, with the tech-heavy Nasdaq Composite leading the way and hitting a new all-time closing high.

The broad-based S&P 500 also hit a new closing high, and the Dow Jones Industrial Average – the last of the three to start hitting fresh peaks this year – rallied late to post a modest gain.

The yield on the 2-year U.S. Treasury note ticked down to 3.539% from 3.558% on Friday. The yield on the 30-year U.S. Treasury bond was down to 4.658% from 4.679%.

The Cboe Volatility Index (VIX) popped in percentage terms – rising more than 6% – but the "fear gauge" remains well within its "normal" range between 12 and 20.

"Lingering concerns about whether the Fed would cut rates eased last week when the spike in jobless claims highlighted a softening labor market," observes E*TRADE Managing Director Chris Larkin. "Now the discussion will turn to how aggressively the Fed will act."

Larkin says the market "may take its near-term cues from Chairman Powell’s press conference" amid mixed incoming inflation data. Also, he adds, "The Fed may remind everyone that it may be focused on jobs now, but it hasn’t forgotten about the other half of its mandate."

– David Dittman

Miran, Cook to vote at September Fed meeting

The Senate on Monday confirmed Stephen Miran as the newest member of the Federal Reserve's Board of Governors, replacing Adriana Kugler, who resigned in August.

This means Miran will participate in the September Fed meeting, which kicks off today.

Fed Governor Lisa Cook will also be at the table after an appeals court on Monday denied the White House's eleventh-hour efforts to fire her over allegations of mortgage fraud.

Both Miran and Cook will vote on monetary policy, too.

The 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

Consumer spending stayed strong in August

Data released Tuesday morning showed that consumer spending remains strong.

According to the Census Bureau, retail sales rose 0.6% from July to August, while July's figure was upwardly revised to 0.6% from the initial reading of 0.5%.

Consumers were busy shopping online and going out to eat, which helped boost the headline number for August, while car sales also provided a lift.

"The U.S. economy is still humming. The August retail sales report proved that the strength of the mighty consumer cannot be easily discounted," says Priscilla Thiagamoorthy, senior economist at BMO Capital Markets. "So far, there has been little evidence that tariffs or softer labor market conditions are weighing on demand."

Thiagamoorthy adds that U.S. households, which represent the biggest pillar of the economy, "are still holding up thanks to healthy balance sheets sporting record-high household net worth."

- Karee Venema

Industrial production ticked higher in August

Data from the Federal Reserve showed that industrial production increased by 0.1% from July to August, beating economists' forecast for a 0.1% decline.

"In isolation, that headline print may sound encouraging, but taken in the context of a sharp downward revision that took July's decline from a small 0.1% to a more disconcerting 0.4%, this latest report puts overall output lower than where we thought we were in July," say Wells Fargo economists Shannon Grein and Tim Quinlan.

One bright spot the two economists point to is manufacturing output, which represents the largest industry group and was up by 0.2% in August after falling 0.4% in July. This was due to a 2.6% rise in the production of motor vehicles and parts.

But even with this "modest pickup in manufacturing activity" in recent months, Grein and Quinlan are still cautious as overall activity remains constrained amid continued uncertainty.

"While tariff rates haven't moved all that much in recent weeks, the administration looks to still be fine-tuning trade policy between different country-specific trade deals and product-specific tariffs that are still on the table," they say. And while the Fed is set to resume its rate-cutting cycle tomorrow, the economists "expect borrowing costs to settle relatively elevated."

As such, the pair note that it will likely be "some time yet before we see a broadening out in manufacturing activity."

- Karee Venema

How will rate cuts impact cryptocurrency prices?

With a rate cut all but certain to be announced tomorrow afternoon, the real question now becomes "by how much" and "whether Powell leaves the door open for a faster pace of easing," says Matt Mena, crypto research strategist at 21Shares.

CME Group FedWatch currently has the probability of a half-percentage point cut at 4%, while Polymarket puts the odds closer to 8%, Mena notes. While low, the strategist reminds us that the Fed has surprised before and "has shown a willingness to pivot faster when conditions demand it."

With market participants already in risk-on mode – as evidenced by a stock market at record highs and bitcoin prices back near $115,000 – a more dovish tilt by the Fed, either through a surprise 50 basis-point cut or a dot plot that signals more easing than anticipated, "could force a repricing of the entire curve and set the stage for bitcoin to challenge new highs into year-end," Mena says.

- Karee Venema

Powell and his purple ties

The odds of a September rate cut are high. It's also a safe bet that Fed Chair Powell will be wearing a purple tie during tomorrow'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

Wednesday will mark the start of the Fed's gradual easing, says FHN Financial senior economist

Sophia Kearney-Lederman, senior economist at FHN Financial, is among those who expect a quarter-percentage-point rate cut at this week's Fed meeting, which will bring the federal funds rate to a range of 4.0% to 4.25%.

"We anticipate this will be the start of gradual easing as the Fed navigates from restrictive policy to more neutral policy," Kearney-Lederman wrote in emailed commentary. "Many on the FOMC have acknowledged that rates are currently restrictive, though by how much is what will determine how many more cuts come after the September meeting."

The economist admits that "the Fed is in a tricky place as they head toward easing," given that risks to inflation are "tilted to the upside" and risks to the labor market are "leaning to the downside."

While some committee members, such as Governors Waller and Bowman, believe the impact of tariffs on inflation "will be a one-time effect," others, including St. Louis Fed President Musalem, seem concerned the impact will be more lasting, Kearney-Lederman says.

"At the September meeting, we expect there will be discussion around not only whether the Fed should cut rates or not, but also whether that cut should be 25 basis points or 50 basis points," she adds. "Beyond the interest rate decision that will be made this week, the committee will also release an updated Summary of Economic Projections showing updates to participants' projections for growth, inflation, unemployment and the fed funds rate. The dot plot will be something to watch."

With two remaining meetings left in 2025 – in October and December – the dot plot "will indicate how much more easing individuals project this year," Kearney-Lederman says.

- Karee Venema

Stocks slip ahead of Fed Day

The main U.S. equity indexes traded lower Tuesday but remained near all-time highs. At the closing bell on Fed Day Eve, the tech-heavy Nasdaq Composite was off 0.1% at 22,334, the broad-based S&P 500 had slipped 0.1% to 6,066, and the blue-chip Dow Jones Industrial Average was down 0.3% to 45,757.

Over in the bond market, the 2-year Treasury yield fell 2.5 basis points to 3.51%, while the yield on the 10-year Treasury edged down 0.4 basis point to 4.03%.

- David Dittman

Read more: Markets Are Quiet Ahead of Fed Day: Stock Market Today

Stock futures little changed ahead of Fed announcement

Stock futures are holding steady ahead of this afternoon's policy announcement from the Federal Reserve.

At last check, futures on the Dow Jones Industrial Average were slightly higher (+0.05%), while those on the S&P 500 (-0.06%) and Nasdaq (-0.08%) were marginally lower.

As for individual stocks, Nvidia (NVDA) shares are down more than 1% in pre-market trading after a report in the Financial Times suggested China has banned its biggest tech companies from buying the firm's AI chips.

Baidu (BIDU) and Netflix (NFLX) are poised for higher opens after receiving upgrades from Arete Research Services and Loop Capital, respectively.

Housing starts plunged in August

Data from the Census Bureau showed that building permits fell 3.7% from July to August, to a seasonally adjusted rate of 1.31 million. Housing starts plunged 8.5% month over month to 1.307 million units.

"Fed rate relief and lower mortgage rates can't come soon enough for the struggling U.S. housing market," says Sal Guatieri, senior economist at BMO Capital Markets. "Both singles and multiple-family units cratered in the month. And, by the looks of building permits and the latest NAHB Housing Market Index, little recovery is expected in September."

Guatieri points to lofty mortgage rates, a weak labor market and declining home values as reasons for depressed demand, while deported construction workers and higher lumber costs have impeded supply.

"If there are any dissenters favoring a large rate cut at today's FOMC meeting, the depressed housing market will likely be one motivating factor alongside a weakening jobs market," the economist notes.

- Karee Venema

StubHub IPO makes for a busy afternoon on Wall Street

The September Fed meeting isn't the only thing Wall Street is watching today. Online ticket marketplace StubHub is expected to start trading on the New York Stock Exchange under the ticker symbol "STUB" this afternoon.

The company priced its IPO last night at $23.50 per share, raising roughly $800 million in its offering.

The StubHub IPO is taking advantage of this summer's resurgence of public offerings, which was sparked by "clarity on trade policy, a summer rally in growth stocks, and the prospect of rate cuts," according to Renaissance Capital.

"Heading into the fall season, we expect the fastest pace of deal activity since 2021, as more companies accelerate listing plans amid the current momentum," the IPO experts say in their fall 2025 U.S. IPO preview (PDF).

- Karee Venema

Read more: StubHub IPO: Should You Buy STUB Stock?

Stocks are choppy ahead of the Fed

The main market indexes are making modest moves ahead of this afternoon's policy announcement from the Fed and subsequent press conference from Chair Powell.

At midday, the S&P 500 is down 0.1% and the Nasdaq Composite is 0.5% lower. The Dow Jones Industrial Average is outperforming, up 0.6% at last check.

Walmart (WMT) is the best Dow Jones stock so far today, up 2.6% after BofA Securities analyst Robert F. Ohmes reiterated his Buy rating on the mega-retailer and lifted his price target to $125 from $120.

Ohmes said Walmart's AI agent is testing well and will start taking action over the next few weeks or months, versus just answering questions as it does now.

"While the development of the market is still in very early stages, we see WMT as well positioned to be a leader in 'top of funnel' agentic AI commerce given its impressive scale, ability to serve customers both on & offline, unmatched data from 180 million customers and high potential for partnerships with some of the leading LLMs we believe WMT already frequently engages with," Ohmes wrote in a note to clients.

- Karee Venema

One way rate cuts can help extend the stock market rally

It's been an impressive year for the stock market, with the Dow up more than 8%, the S&P 500 12% higher, and the Nasdaq leading with its 15% advance.

These returns are even more impressive considering stocks were teetering near bear-market territory this spring. Indeed, since their April lows, the three main indexes have gained between 22% and 45%.

LPL Financial Chief Equity Strategist Jeff Buchbinder notes that the surge off the spring nadir has been driven by "strong corporate profits, fiscal policy, and a resilient economy," and that "potential rate cuts could be a necessary catalyst for stocks to extend their rally."

Buchbinder says that rate cuts have historically been stimulative for stocks absent a recession. He also points to assets in money market funds, which have been on the rise in 2022, as providing longer-term tailwinds for the stock market.

"The meaningful move lower in rates currently priced in would shift the arithmetic around money market funds, diminishing earnings and potentially leading investors to redeploy capital – ending the unusual trend of money market assets rising alongside equity prices," the strategist explains.

He adds that, historically, increases in the market cap of the broader U.S. equity market correlate with declining or stable levels of money market fund assets, but this "has not been the case since 2022 due to the Fed's rate hiking cycle and 'higher-for-longer' stance, which increased the attractiveness of money market funds."

While Buchbinder admits that it may take a few rate cuts to redeploy cash from money market funds to the stock market, the September Fed meeting "could be an early domino to fall in igniting additional support for the bull market."

- Karee Venema

The Fed decision is in

The Fed decision is in. The central bank cut rates by a quarter-percentage point, as expected.

The only dissent from today's quarter-point cut was newly appointed Stephen Miran, who preferred a half-point cut.

- David Payne

FOMC members expect more rate cuts than in June

The Summary of Economic Projections show the Fed's Board of Governors and regional presidents expect a faster decline of short-term interest rates than what was published in the June SEP.

And there's a difference of opinion among survey participants: about half expect quarter-point cuts at the October and December meetings, and half don't.

- David Payne

Committee members "scattered" on future rate cuts

A plurality of committee members expect two or more cuts to the federal funds rate in 2026 and 2027, but only by about a percentage point's worth from the current range of 4.0% to 4.25%.

Survey participants are very scattered when it comes to looking 12 to 24 months down the road.

- 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.

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

What changed in the September FOMC statement?

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

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. (Previously read: Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.)

The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen. (Previously read: The Committee is attentive to the risks to both sides of its dual mandate.)

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 4 to 4‑1/4 percent. (Previously read: In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent.)

- Karee Venema

The path of least resistance for stocks is higher from here, says HB Wealth

"The Fed's decision to cut its key rate today reflects its belief that a softening labor market is a bigger economic risk than potential future inflationary pressures from tariffs that have yet to materialize," says Ross Bramwell, CFA, managing director of Investment Communications, Shareholder, at HB Wealth. "Although the prices of goods are rising in many areas of the market, and services inflation remains sticky, with a moderately growing economy, consumer spending and corporate earnings have shown resiliency despite sticky inflation."

He adds that the recent increase in initial and continuing unemployment claims is the biggest risk to consumer spending and corporate earnings at the moment, though it's a moderate one. "Employed consumers tend to spend, and that narrative remains intact."

Bramwell notes that markets are likely to view this initial rate cut as a move by the Fed to normalize rates rather than one that was required to stimulate or support the economy.

"Consequently, the direction of least resistance will likely be higher for stocks going into year-end," he says. "While the labor market has softened, it remains balanced as hiring and firing have stalled, and not near recessionary levels. Consumer spending data this week reinforced that the U.S. consumer in aggregate continues to spend, which should support earnings into early 2026."

- Karee Venema

Powell cites labor market weakening as the main reason for today's rate cut

The main reason for today's rate cut, according to Chair Powell, is the slowdown in the labor market, as expected. Job gains are not enough to prevent the unemployment rate from rising further. Even though inflation has picked up, this takes precedence.

- David Payne

Powell talks risks to the labor market

"There's very little growth, if any, in the supply of workers," Powell noted, when asked about risks to the labor market. Employers' demand for labor is also down a lot, leading to an usual balance in the labor market, with scant job growth in recent months.

Powell emphasized that the Fed is still guarding against inflation, but it is coming to see downside risk to the labor market as a growing concern that merited today's quarter-point rate cut. However, he emphasized that there was little appetite among his colleagues for a larger reduction in rates at this meeting.

- Jim Patterson

Mortgage rates are already lower

While many people hope a rate cut will lead to drops in offered mortgage rates, mortgage rates are determined by several factors, including the 10-year Treasury. In the lead-up to this Fed meeting, average mortgage rates had already dipped to 2025 lows.

Lower mortgage rates can open up opportunities for both prospective homebuyers as well as homeowners looking to refinance.

Read more: Mortgage Rates Dip to Year-Low as Jobs Data Disappoints

- Alexandra Svokos

How will the Fed respond to a potential surge in inflation?

Asked how the Fed will respond if inflation accelerates significantly, Powell said that for now, the central bank expects a near-term bump in inflation due to the recently imposed tariffs, but not a long-run increase.

Assuming that pans out, he said that he and his colleagues felt that the Fed can pivot to providing more support to the economy, particularly the weakening labor market, by lowering its benchmark interest rate. That could prove risky if inflation pressures prove more persistent than the Fed is forecasting.

He admitted that it's a challenge when the Fed has to choose between the opposing goals of curbing inflation and boosting the economy. No doubt he is hoping the Fed does not find itself in that position down the road.

- Jim Patterson

"There's no risk-free path" from here, Powell says

"There is no risk-free path" on how the Fed proceeds from here, Powell said when asked if the FOMC's members are uncertain about the outlook for the economy. "We get together, we discuss ... and then we decide what to do, and we act."

But he noted that there is a wide dispersion of views on how to proceed on future interest rate decisions. That attitude might disappoint investors who are hoping for clear signs of more rate cuts in upcoming meetings.

- Jim Patterson

Powell sidesteps question on Lisa Cook

Asked about the president's ongoing efforts to remove Fed governor Lisa Cook, Powell closes the door on adding commentary.

"I see it as a court case that would be inappropriate for me to comment on," he said simply - and characteristically.

- Alexandra Svokos

Stocks head south during Powell's presser

Stocks have turned lower since Powell started talking, as markets had hoped for more commitment to lower rates in future meetings. He's not slamming the door on additional rate cuts, but he's also not teeing them up.

In other words, Chair Powell is doing exactly what he's always done.

- David Payne

Powell says today's rate cut is not an isolated action

"I'm not blessing what the market is doing at all," Powell said when asked about whether this initial rate cut will make much difference for the economy, but he suggested that this was not an isolated action, and that financial markets are pricing in additional rate reductions.

That might be more in line with what investors had been hoping to hear. (And stocks have moved off their lows as a result.)

- Jim Patterson

Savers need to strike now, while rates are high

The rate cut, coupled with inflation, can make savers feel the pinch. However, because it's been almost a year since the last rate cut, APYs on high-yield savings accounts and CDs are over 4%. While this might not remain for long, now is an excellent time to capitalize if you have short-term or year-end savings goals you want to reach.

And if you're concerned about inflation, I'll explain how high-yield savings options still outpace inflation for now.

Read more: Are High-Yield Savings Accounts Still Outpacing Inflation?

- Sean Jackson

Powell on labor supply and mortgage rates

On the labor market, Powell said that the job creation rate at which the unemployment rate starts rising has come way down because of lower supply. It could be anywhere from zero to 50,000, but the Fed thinks that the odds the economy is currently below that level seem likely.

On the housing market, Powell noted that mortgage rates have drifted lower and, of course, mortgage rates near zero help housing the most. But the Fed believes a good economy is the best medicine.

- David Payne

Near-term risks to the labor market and inflation are Powell's biggest concerns at the moment

Asked if Powell is concerned that consumers' expectations of long-term inflation are rising, Powell said no, and called most surveys of expected inflation to be "rock solid" in how stable they have been.

He doesn't see signs that markets are concerned the Fed could be losing its prized independence as it comes under more political pressure and thus may be less able to combat inflation pressure.

For now, he is just worrying about near-term risks to the labor market and the price increases he expects tariffs to foster. That sounds like enough to keep him busy.

- Jim Patterson

Thank you, next: Powell will not answer questions about politics

At this point, this much is clear: If you're going to ask Powell about politics, he's not going to give you an answer. Just today, he swiped down questions about the Trump-embattled Lisa Cook, if he would step down (as the president wants), how he feels if Americans trust the president more than the Fed, and so on. His answers are consistently forcefully neutral. There will be no "gotchas" in this room.

And yet ... the press will continue asking, hoping for an opening or momentary slip. We all have editors to answer to, after all.

Of course, this stalwart refusal to add commentary sets up a stark contrast to the president, never one to be accused of keeping his opinion to himself. President Trump has long made use of the power of the press (and social media) to try to get what he wants, stating his wishes loudly and clearly.

Powell won't answer the question of why some people might trust Trump more than the Fed, but I can give it a go: Trump's a politician. His job is predicated on getting people's support. But Powell, especially in how he says he views his role and the role of the Fed, doesn't need the people's support. He just needs to get the numbers right. And, at least as it pertains to the public's trust, that strategy seems to be working.

- Alexandra Svokos

September Fed meeting: what the experts say

With the September Fed meeting now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the outcome and what it could mean for investors going forward.

"Chairman Powell laid out a detailed and logical explanation for why the Fed is now focusing more on labor market weakness than they are on inflation, which should indicate that the Fed plans to do more than one rate cut this year. It's interesting that Waller and Bowman both stuck with consensus – despite auditioning for the Fed Chair position – and the newest member, Miran, has leapfrogged them with an even more dovish 50 bps dissent. It's possible that they are trying to position themselves as more serious members of the Fed, who are interested in cutting rates 25 bps, but don’t feel the need for draconian cuts." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"It is clear that while Fed members have been under a lot of political pressure from the administration, today's decision seems to underscore the fact that the Fed remains independent in its decision-making process. The dot plot also shows that Fed members are worried about economic growth going into the last quarter of the year and are also concerned about potentially higher growth next year, and that is the reason why they are more hawkish regarding rate cuts next year, which is in line with our view on the U.S. economy." – Eugenio J. Alemán, Chief Economist, and Giampiero Fuentes, Economist at Raymond James

"The worst kept secret is now official, as the Fed cut 25 basis points. The door is open to more cuts later this year, but it is clear they are now more worried about the slowing labor market than inflation. All in all, today's news didn't rock the boat and there were no curve balls." – Ryan Detrick, Chief Market Strategist at Carson Group

"The dot plot now implies two more cuts this year, but Powell downplayed its significance, framing the outlook as 'more balanced' rather than decisively tilted toward labor market risks. The SEP revisions, including higher inflation, higher GDP, and lower unemployment, raise questions about the internal consistency of the Fed's policy path. Markets may welcome the easing bias, but the messaging remains nuanced and far from a full pivot." – Dan Siluk, Head of Global Short Duration & Liquidity and Portfolio Manager at Janus Henderson Investors

"Although the outcome of today's decision to lower the federal funds rate by 0.25%, from 4.25% to 4.00%, was anticipated and as expected, it is still one of the most closely watched in recent history. The Fed's decision to reduce rates without further progress toward its 2% inflation goal reflects its concern that 'downside risks to employment have risen.' The widely watched evolving composition of the committee reflects a wide range in the expected rates going forward, according to the dot plots. The lone dissenting vote today was from the most recent addition to the committee, Stephen Miran, who was in support of a more aggressive half-point rate cut." – Louise Goudy Willmering, Partner at Crewe Advisors

"It remains to be seen how the long end of the bond curve will react if inflation accelerates further in coming months and policymakers choose to continue to reduce interest rates. Around the world, additional risk premiums have been moving into long-term bond markets, and any sense that the world's most important central bank is not focused on its mandate could lead to an acceleration of that process." – Dr. David Stubbs, Chief Investment Strategist at AlphaCore Wealth Advisory

- Karee Venema

Dow hits new highs, stocks closed mixed on Fed Day

All three main U.S. stock market indexes spiked after the Federal Open Market Committee announced a 25 basis point cut to the target range for the federal funds rate, but quickly fell back into their intraday ranges and closed mixed.

Factors other than monetary policy figured into a relatively stable trading session, as the world's most important stock suffered another trade war blow.

Nvidia (NVDA) was the worst-performing stock in the Dow after the Fed announcement, even as the index surged as much as 463 points and hit a new all-time high on an intraday basis.

Small-cap stocks – seen to benefit most as a group from lower interest rates – continued to rally into and through the FOMC decision, with the Russell 2000 Index up as much as 2.1% intraday, closing modestly higher and extending to nearly 37% the bounce off its April 9 post-Liberation Day low.

The tech-heavy Nasdaq Composite was down 0.3% at 22,261, and the broad-based S&P 500 had shed 0.1% to 6,600. But the blue-chip Dow Jones Industrial Average was holding a 0.6% gain at 46,018.

The yield on the 2-year U.S. Treasury note inched up to 3.549% from 3.510% as of Tuesday. The yield on the 30-year U.S. Treasury bond edged higher to 4.669% from 4.646%.

Read more about Fed Day price action…

– David Dittman

Throughout 2025, the Federal Reserve has kept interest rates steady after cutting them by a full percentage point in 2024. But signs are emerging that change may be on the horizon.

Inflation appears to be cooling, the job market is showing signs of softening, and at the August Jackson Hole, Wyoming, conference, Fed Chair Jerome Powell indicated that rate cuts could be on the table in upcoming meetings.

So why does this matter?

The Fed's goal is to keep the economy balanced — not too hot, not too cold. Think of it like Goldilocks' porridge: just right. The key tool it uses is the fed funds rate, which influences how much banks charge each other for overnight loans.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

This rate affects a wide range of borrowing costs, from credit cards to mortgages, but it primarily targets short-term interest rates.

Longer-term rates, like those on five- or 10-year loans, are shaped by more than just Fed policy. They reflect expectations about future short-term rates, inflation and market demand.

So, a rate cut doesn't automatically mean lower long-term borrowing costs.

Given that it looks highly likely that the Fed will lower rates in the near future, it's worth considering who would benefit from lower rates, who is hurt by them, and what to do if rates are going down.

Who benefits from lower rates?

Theoretically, anyone who is looking to borrow money benefits from lower rates, but due to the nature of the yield curve (the interest rate for different lengths of borrowing), not all borrowers benefit equally.

The type of debt that is most directly affected is variable rate debt with rapid resets. Things that tend to fall into this category are home equity lines of credit (HELOCs) and credit cards on the consumer side and floating-rate loans the corporate side.

Adjustable-rate mortgages also benefit from lower rates, but after the financial crisis, their use plummeted and are fairly uncommon today.

While it is always nice to get a break when a 27.5% credit card interest rate moves to a 26.5% rate, assuming the Fed eventually implements a cut of 1 percentage point, that probably won't help many people.

Arguably, the same is true for things like home equity lines, which tend to carry higher interest than mortgages.

More affordable housing via lower rates is often cited as a reason rates need to be cut now, and home sales are at a nadir in this high-rate environment.

There are a few issues with this argument, however. Most people finance their homes with 30-year mortgages, which are more closely tied to the 10-year Treasury rate, not the fed funds rate.

As markets expected higher inflation in the future, longer-term rates actually rose last year despite Fed cuts. That same phenomenon is happening now. In other words, rate cuts may actually hurt those looking to buy a home.

If mortgage rates do drop, we could see increased demand and further home price increases, offsetting the benefit.

Unfortunately, the real solution to more affordable housing is an increased supply of homes, complemented by lower rates and lower building costs.

For those looking to refinance, lower rates would clearly help, and an increasing number of homeowners are paying high rates. The general rule of thumb is to refinance when you can save 1 percentage point or more on your mortgage rate, which may be a way off for many.

Similarly, lower rates will make car buying cheaper, and the rising number of auto delinquencies shows that this relief is needed.

Who could feel the downside of lower rates?

A surprising fact about America is that we are a net saving population. You frequently see headlines lamenting the low average savings rate of Americans (which is a sad truth), but that belies the point that we do save.

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Importantly, many older and retired people are significant savers, and much of this money ends up in investments tied to interest rates. This means that lowering interest rates actually lowers the net income of the population.

Investors living comfortably by buying CDs and Treasuries will see a drop in their disposable income. The same is true for many corporations that have large balance sheets invested in bonds.

What should you do?

Now is a great time to assess any outstanding debt and monitor when it makes sense to refinance, especially if you have a mortgage rate above 7%. As rates decline, it can become more attractive to borrow an equity line and pay off any higher interest debt, such as credit cards, as well.

More important, perhaps, is thinking about locking in good interest rates now rather than waiting. Review cash positions in your bank accounts and make sure anything above a six-month cushion is generating good interest in CDs or other high-yielding investments.

If you have significant balances parked in high-yield savings, now is a great time to buy things like Treasuries to lock in rates.

Of particular note, for those in high-tax states, municipal bonds are trading at a historical discount and offer an opportunity to get tax-free income at very compelling rates.

As the environment changes, you should actively manage your exposure to interest rates to better position yourself for what may come next.

Bradley Thompson offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN), offers investment advisory products and services through Equitable Advisors, LLC, a SEC-registered investment advisor, and offers annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC in CA; Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc., in PR). Equitable Advisors and Equitable Network are affiliates and do not own or operate New Canaan Group. PPG-8363243.1 (Exp 9/29)

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The latest Consumer Price Index (CPI) report showed that President Donald Trump's tariff policies continue to have a moderate impact on cost pressures, but the Federal Reserve is still expected to lower the federal funds rate when it meets next week.

According to the Bureau of Labor Statistics, headline CPI was up 0.4% month over month in August, higher than the 0.2% rise seen in July and the 0.3% increase economists expected.

The CPI was 2.9% higher year over year, a quicker pace than the month prior and the largest annual increase since January. Still, the results arrived in line with estimates.

Shelter was the "largest factor" behind the monthly increase in headline CPI, according to the BLS, up 0.4% from July to August. Energy costs were also on the rise last month, up 0.7% as gas prices jumped 1.9%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.3% month over month and 3.1% year over year. Both figures matched what was seen in July and were on par with economists' forecasts.

"We continue to expect the Fed will cut rates next week due to weak labor market data and think it could follow this up with further easing in October," says Simon Dangoor, head of Fixed Income Macro strategies at Goldman Sachs Asset Management.

Dangoor adds that while "near-term inflationary pressures remain high, and further strong readings are likely in the coming months as businesses run down inventories and pass on cost rises, the Fed is likely to draw comfort from anchored inflation expectations and the absence of overheating in the labor market, which reduce the risks of second-round effects."

According to CME FedWatch, futures traders are now pricing in a 91% chance the Fed will issue its next quarter-point rate cut at its meeting next week, up from 86% one month ago. The betting odds are for two additional cuts by the end of the year.

With the August 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 August CPI report

"Thursday's CPI was in line with expectations and will not derail the Federal Reserve's expected rate cut at the September meeting. It's clear that inflation is relatively calm, which gives the Fed the flexibility to focus more on stemming ongoing weakness in the labor market. While inflation is still running above ideal levels, the full employment portion of the Fed mandate is carrying much more weight." – Skyler Weinand, Chief Investment Officer at Regan Capital

"Right now, inflation is a key subplot, but the labor market is still the main story. Today's CPI may appear to offset yesterday's PPI, but it wasn’t hot enough to distract the Fed from the softening jobs picture. That translates into a rate cut next week – and, likely, more to come." – Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management

"The last bolt on the gate has fallen out and the rate-cutting horse is about to leave the barn. The Fed's path is clear in the short run, but over the medium term, the fact that core inflation is running quite a bit higher on a month-over-month basis is going to complicate matters and the market knows this. Watch the market reaction today, because all things being equal, a rate cut should be very bullish for the market, but the 0.4% month-over-month inflation rate is much too high for a sustained rate cutting cycle and it will now be an issue of how many more times can the Fed cut if inflation does not head toward their 2.0% year-over-year target." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

"For the first time in a long time, CPI is being overshadowed on its release day by another data series: initial jobless claims. A spike in initial jobless claims to the highest level in 4 years helped briefly push the 10-year Treasury below 4% this morning, despite a larger-than-expected increase in the consumer price index. This dynamic illustrates the Fed's focus on the 'maximum employment' half of the dual mandate, with today's inflation print not hot enough in our view to derail a 25 basis point interest rate cut at next week's FOMC meeting." – Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"In today's numbers, we are seeing some impact from tariffs, especially with higher prices on cars and clothes. A sticky category not as connected to trade is insurance which we expect to weigh on inflation for the next few months. The hot inflation print will not likely change the Fed's plan to cut rates in September but it's possible the Fed will hold in October if inflation expectations no longer look well-contained." – Jeffrey Roach, Chief Economist for LPL Financial

"As expected, consumer inflation rose to the highest level since January, driven by price increases in shelter and food. There was not much surprising in the report, but the increase in food prices happened at the fastest pace so far this year. Housing has been a consistent source of inflation. Much of this year, Chair Powell has noted that risks to price stability and full employment were equally balanced. After the meaningful jobs revision last week, many believe that the risks to full employment now outweigh the risks to prices. The Fed probably sees that as well, but today's inflation report likely means a modest 25-point decrease rather than a larger cut." – Scott Helfstein, Head of Investment Strategy at Global X

"Inflation is in line with expectations but still running hot. Core CPI at 3.1% is still stubbornly high, and while in-line expectations set us up for a rate cut in September, I believe the market pricing in 3 is too much given the performance of equity prices and high overall inflation. Watch out for developments in the Middle East. Higher oil prices can put the Fed in a tough position when we already saw higher food and shelter prices." – Jason Barsema, Co-Founder and President at Halo Investing

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Federal Reserve Chairman Jerome Powell has been under significant pressure from the White House to cut interest rates.

Pretty much every modern president would prefer to serve in a low-rate environment, but none has been as vocal about that desire as President Donald Trump.

Weaker economic data that has recently come to light via a revision and a messenger shot (metaphorically, of course), mean that the president might get his wish in September.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Our retired clients have largely benefited from higher rates, as they have mortgages that were either refinanced around 3% or paid off. They typically don't carry consumer debt and often have the ability to pay for a car in cash when it makes sense.

On the flip side, these retirees have benefited from rates hovering between 4% and 5% on cash-equivalent investments, bonds are actually paying a coupon, and if they want guaranteed income, annuities have come back into favor.

If the Fed announces any significant cuts, mortgage rates are likely to come down. Millennials and Gen Z will breathe a sigh of relief, but Boomers will wish they'd taken advantage of what was available.

Here are three ways to avoid that regret.

1. Lock in cash rates beyond one year of expenses

The money market instruments we use with clients have yields that typically adjust every seven days. When/if the Fed cuts rates, these are one of the first instruments to come down with the federal funds rate.*

If you're very conservative or are using some sort of bucketing strategy where you have more than one year's worth of expenses, you might want to lock in rates for any amount greater than your first year of expenses. Certificates of deposit (CDs) from one to five years are very competitive. Treasury securities over the same terms are similar.

Multiyear guaranteed annuities (MYGAs) are similar in structure to CDs but are offered by insurance companies. They'll allow you to guarantee a competitive rate and defer income taxes until the end of their term.**

If I'd told you a few years ago that you could get about 5% in something guaranteed, I'd have had to tie you down to keep you from putting all your money there. I'm still in the boat of not overallocating to cash, but maximizing the yield on what you have in cash.

2. Look at guaranteed income

MYGAs are a type of fixed income designed for accumulation. MYGAs' cousins are fixed annuities structured for income. Fixed annuity guarantees in both forms are more attractive when interest rates are high.

Deferred income annuities (DIAs), single-premium immediate annuities (SPIAs) and indexed annuities with income riders all look a lot better than they did from 2010 to 2022.

These guarantees are a bit opaque in that you don't know exactly when they'll drop if the Fed cuts rates. But if you're thinking about retirement income and would like to guarantee some portion of it in exchange for liquidity and some upside exposure, it's worth looking into.

We lean on our planning software to compare your current situation with what it would look like with some amount of guaranteed income. Sometimes, it helps. Other times, it doesn't. You can access a free version of what we use here.

3. Re-evaluate your asset allocation

Financial companies benefit from a rising-rate environment. Three years ago, they would charge you 3% for a 30-year mortgage. Today, it's about 7%.

Are they paying you the full 4% delta in your checking account? They keep that spread, and spreads often increase as rates do.

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Real estate investment trusts (REITs) benefit from falling rates because they can buy more with the same interest rate. The point is that different asset classes and sectors do well in different environments.***

If you are a DIY investor, it's probably going to take too much time and effort to try to increase or decrease exposure based on the interest-rate environment.

However, if you're working with a financial adviser, they should be paying attention to where we are and where we might be going.

A few years ago, the acronym TINA was popular, signifying the belief that There Is No Alternative to investing in stocks.

Stocks probably should still make up a significant portion of your portfolio, but for the other parts, there are many alternatives.

* Investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in these funds.

** Annuities have fees, risks, limitations and restrictions. Withdrawals can be subject to income taxes and, if made before age 59½, to a 10% IRS penalty; surrender charges can also apply. All guarantees and benefits of the annuity are subject to the financial strength and claims-paying ability of the issuing insurance company.

*** Investments in Real Estate Investment Trusts (REITs) involve risks, including the potential loss of principal, illiquidity, and fluctuations in market value. Investors should carefully review all offering documents, risk factors, and tax considerations before making any investment decision. REITs may not be suitable for all investors.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The 2025 stock market has been a rollercoaster with more uncertainty on the horizon. Rebalancing your portfolio to include more fixed-income assets, which pay ongoing interest or dividends, can help reduce losses during a future downturn. “If you held on through the spring and into the summer rebound, you likely haven’t lost money and have a freebie to revisit,” says David Rosenstrock, a financial planner with Wharton Wealth Planning in New York City.

With fixed-income investments, such as bonds, you put up your money for a specified period and receive interest income during that time, just like making a loan. They performed poorly for over a decade following the 2008 financial market crash. Market interest rates were near zero, and these assets paid little.

Today, interest rates are closer to their historical average, so fixed-income assets, which also include CDs, money-market funds and some ETFs and mutual funds, provide a more reasonable return along with safety.

So find the right balance for you. That depends on your goals and, most importantly, your risk tolerance. The rule of 120 suggests that you subtract your age from 120. That’s the highest percentage you should have in stocks, with the rest in either cash or fixed-income. Another strategy is to have at least five years of living expenses in cash and fixed-income, so you have plenty of time to wait out stock market downturns in retirement.

“If you were losing sleep during all that market volatility, it likely says you’re taking on too much risk and should move into more fixed-income,” says Rosenstrock.

Here are some types of fixed-income investments, offering different balances between return and risk:

U.S. Treasuries

The U.S. government issues Treasuries in the forms of bills, notes and bonds to borrow money from investors.

The Treasury return is often referred to as the risk-free rate, showing the confidence investors feel in the U.S. government to make promised payments.

U.S. Treasuries are available for periods running from four weeks to 30 years. Treasury bills (a.k.a. T-Bills) mature in a year or less; T-Notes mature in two to 10 years, and T-Bonds mature in 20 or 30 years. Currently, Treasuries are paying 4% to 5% a year, and the interest payouts are taxable.

Important: The value of Treasuries can fluctuate, depending on current interest rates. Hold to maturity, and you get all of your principal back. But if you cash out early, the value is what the market says that day. If rates have gone up since your initial purchase, the value of your Treasury will fall. If rates fall, value goes up.

Since interest rate trends are unpredictable, one strategy is to spread your money over Treasuries maturing at different times, known as a ladder. That way, if rates fall after your initial purchase, you have some cash still locked in at higher rates, and if rates rise, your short-term Treasuries will mature sooner, returning money to reinvest at higher rates.

TIPS and STRIPS

There are variations of U.S. Treasuries. Treasury Inflation Protected Securities (TIPS) allow you to earn more interest should inflation go up, but less if inflation falls. The amount you get back at maturity can also be higher than you paid when inflation is high.

Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) do not pay interest income. Instead, you pay a smaller amount upfront, and your return comes from a larger payout at maturity. For example, you pay $6,755 for a STRIP that guarantees a $10,000 repayment in 10 years, roughly a 4% annual return.

One drawback, though, is that you owe income tax on the assumed return each year, even though you don’t receive the ongoing interest income. To avoid tax on this phantom income, keep STRIPS in a tax-deferred retirement account.

Municipal bonds

State and local governments issue municipal bonds to raise money. They are a little riskier than Treasuries, as there is a greater chance that these governments might run into financial trouble and fail to make their promised interest payments.

In exchange, municipal bonds can earn a higher after-tax return on your money because municipal bond interest is exempt from federal taxes (although not from all state income taxes). If you are in the 24% tax bracket, the tax-free payout on a 4% muni-bond is equivalent to a Treasury paying 5.26%.

Corporate bonds

Companies also issue bonds. The safety of the bond depends on the organization behind it. Independent agencies, such as Moody’s and Fitch assign companies a credit rating. Companies with a BBB- or higher credit rating are considered investment-grade bonds. The agencies deem these bonds as more likely to pay their creditors as promised, with the higher the score, the better the company’s creditworthiness. Investment-grade bond yields are averaging a little over 5% on the Bloomberg U.S. Corporate Bond Index.

On the other hand, corporate bonds with a rating of BB+ or lower are known as high-yield or junk bonds. These companies are more likely to miss payments, and if the company encounters serious financial trouble, it may not repay your principal. In exchange, they pay much higher interest rates. The S&P U.S. High Yield Corporate Bond Index earned an 8.89% annual return over the last three years.

“Are junk bonds risky? You bet, but so is the stock market," says Robert Tipp, head of global bonds at PGIM, Prudential’s investment management division. He notes that while losses in junk bonds are possible, a diversified portfolio with bonds from different issuers has historically experienced much less severe annual losses than the stock market.

Preferred stock

Preferred stock is a hybrid of stocks and bonds. Preferred stock shares receive fixed dividend payments, ranging from 6% to 9% a year. However, those payments are not promised by the company, unlike bond interest. If a company encounters financial difficulties, it could temporarily suspend payments. Depending on the terms, the company may catch up on missed payments later or it may not.

On the other hand, preferred stockholders take priority over common shareholders in receiving dividend payments. However, if the company does well, the preferred stock shares do not appreciate in value like common equity on the stock market.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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The Federal Reserve Bank of Kansas City's annual Economic Policy Symposium bills itself as a "venue for international central bankers, Federal Reserve officials, other policymakers and academics to discuss issues of mutual concern."

But normies really just care about what Federal Reserve Chair Jerome Powell had to say in his speech Friday morning.

After all, when the Fed chief speaks, markets listen. And that's especially true at this particularly delicate time for both the economy and the independence of the Federal Reserve.

Powell walked a fine line when he delivered what will likely be his final keynote address at Jackson Hole.

The Fed's dual mandate of maximum employment and stable prices is increasingly challenged by a softening labor market and above-target inflation.

In terms of these goals, Powell said in his Jackson Hole speech, that "the labor market remains near maximum employment, and inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs."

However, Powell added that "the balance of risks appears to be shifting," and this "may warrant" the Fed adjusting its policy stance.

With Powell & Co. increasingly under pressure from the White House to lower interest rates, the Fed chair added that Federal Open Market Committee (FOMC) members will make policy decisions "based solely on their assessment of the data and its implications for the economic outlook and the balance of risks" and "will never deviate from that approach."

Should the Fed cut rates?

In an argument for lower rates, it's true that gross domestic product (GDP) grew at an annual rate of only 1.2% in the first half of the year. Second-half growth is set to come in at a "still-subdued" 1.3%, writes David Payne, staff economist at The Kiplinger Letter, in the Kiplinger GDP Outlook.

A softer labor market also helps make the case for lower rates. The July jobs report featured "stunning revisions that suggest the labor market slowdown has happened earlier than economists expected," Payne notes in the Kiplinger Jobs Outlook.

On the other hand, inflation remains above the Fed's long-term target and tariffs are very much complicating the outlook.

"Inflation has made little progress toward the Fed's 2% target since last year's Jackson Hole conference," writes Lauren Goodwin, economist and chief market strategist at New York Life Investments. "The labor market is better balanced, but increasingly shaped by a mix of cyclical softening, structural trends and policy-driven shocks."

Powell also faces challenges outside the arena of economic data. In addition to the mounting political pressure for the Fed to cut rates, Powell's tenure as chief has even seemingly been put at risk.

More recently, President Donald Trump is threatened to fire Fed Governor Lisa Cook amid allegations over her mortgages.

And inside the Fed, two voting members of the FOMC dissented with the central bank's move to keep rates steady at its July meeting.

Either way, odds are that the central won't stand pat at the next Fed meeting.

Following Powell's Jackson Hold speech on Friday, interest rate traders are now assigning a 91% probability to the FOMC cutting the short-term federal funds rate by a quarter of a percentage point, or 25 basis points, in September.

That's up from 75% one day ago and 58% a month ago, according to CME Group's FedWatch, reflecting changes in the labor market.

What the experts say about Powell's Jackson Hole speech

With the Fed Chair Powell's Jackson Hole speech 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.

"Fed Chair Powell has begun to turn the wheel of the Fed with his speech today, which should benefit consumers and small businesses, along with sectors benefiting from AI, technology, REITs and ttilities. All these sectors benefit from lower financing costs and their dividends will be more attractive with lower bond yields. This is only the beginning of what I hope is a new commitment to several future rate drops." – Ben Fulton, CEO of WEBs Investments

""As expected, Powell's comments remained measured. He acknowledged the difficulty in the Fed's current balancing act and re-re-reiterated their reliance on data-driven decision making. However, he also seemed to conclude that tariffs were more likely to drive a one-time increase in prices, rather than drive a more continuous upward trend in inflation, which would be a change in his stance. He also noted the clear slowdown in the labor market. The implication was that the likelihood of a rate cut in September was even higher than it had been before." – Melissa Brown, Managing Director of Investment Decision Research at SimCorp

"This is just what investors were hoping to hear, given the recent slowdown in the labor market. While there is still one more employment report before the September meeting, it's clear the Fed has enough data under its belt to justify a September cut. The stock market tends to favor lower interest rates and given the likely prospect of a September cut, we expect the market's bullish trend to continue over the short term. We would not be surprised to see a 5-10% correction in the S&P 500 sometime between September and October, in line with historical trends, before rallying to 6,500 through 7,000 by the end of the year." – David Laut, Chief Investment Officer, Abound Financial

""The macro outlook should convince the Fed to cut rates at the September 17th meeting. The hint of upcoming rate cuts will tamp down yields and bolster markets in the near term. But looking out on the horizon, structural shifts in the economy have created uncertainty about the long-run fed funds rate. Suffice it to say, the neutral rate will be higher than during the 2010s." – Jeffrey Roach, Chief Economist for LPL Financial

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The latest Consumer Price Index (CPI) report showed that President Donald Trump's tariff policies continue to have a moderate impact on cost pressures, although the overall data lifted expectations for a September rate cut.

According to the Bureau of Labor Statistics, headline CPI was up 0.2% month over month in July, slower than the 0.3% rise seen in June and in line with economists' estimates.

The CPI was 2.7% higher year over year, unchanged from the month prior and slightly below economists' projections for a 2.8% rise.

Shelter was the "primary factor" for the monthly increase in headline CPI, according to the BLS, up 0.2% from June to July. However, energy costs declined in July, falling 1.1% as gas prices dropped 2.2%.

Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.3% month over month and 3.1% year over year. Both figures were higher than what was seen in July, while the annual increase came in hotter than economists' forecasts.

"Inflation is on the rise, but it didn't increase as much as some people feared," says Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. "In the short term, markets will likely embrace these numbers because they should allow the Fed to focus on labor-market weakness and keep a September rate cut on the table."

Over the longer term, though, Zentner says that "we likely haven't seen the end of rising prices as tariffs continue to work their way through the economy."

According to CME FedWatch, futures traders are now pricing in a 90% chance the Fed will issue its next quarter-point rate cut at its September meeting, up from 86% one day ago and 57% one month ago. The betting odds are for two additional cuts by the end of the year.

With the July 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 July CPI report

"While one data point does not make a trend, two consecutive months of higher 12-month [core] inflation will make it difficult for the Fed to justify a rate cut at their September 17 meeting. We remain bullish on the S&P 500 index into year-end, but we do not expect a September rate cut unless the jobs market drops off drastically over the next 45 days. If the Fed has to choose between shoring up the labor market or fighting inflation, we believe they will opt to backdrop the labor market." – Larry Tentarelli, Chief Technical Strategist for Blue Chip Daily Trend Report

"Today's release showed less of a pickup in goods prices than some were expecting as the tariff pass-through is present but to a lesser degree than was seen in June. Given the uncertain and shifting tariff landscape that existed through the month of July and into August, we would be hesitant to read too closely into today’s release." – Josh Jamner, Senior Investment Strategy Analyst at ClearBridge Investments

"The July CPI report came in broadly in line with expectations, reinforcing the view that inflation is under control, even if not quite at target. The headline print was contained by falling energy and gasoline prices, while services remained the primary driver of the overall increase. Meanwhile, core services inflation was driven by volatile components like airfares and medical care, categories that have a lower weight in the Fed's preferred PCE measure. In our view, the Fed will look through the noise in goods inflation and focus on the broader macro signals; labor market softness, consumer fatigue, and the risk that slowing growth could become deflationary over the medium term." – Daniel Siluk, Head of Global Short Duration & Liquidity at Janus Henderson Investors

"July's CPI figure came in in line with expectations, with core inflation at 3.1% year over year. The Fed is getting the data support that the tariff effect on price level will mostly be transitory. The Fed's policy stance is highly data-dependent, and with inflation contained and labor market softness increasingly evident in revised payroll data, the emphasis will now be skewed toward employment. In essence, this inflation print supports the narrative of an insurance rate cut in September, which will be a key driving force for the markets." – Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management

"Although the Fed supposedly focuses more on the core number than on the headline number (in order to strip out the noisier components of inflation), we don't believe that this report will deter the Fed from cutting rates next month. More importantly, there is one more jobs report (on 9/5) and one more CPI report (on 9/11) before the Fed meets again and those reports will take on even more importance as the Fed decides whether to cut rates to preemptively support the labor market or whether the inflation reports are concerning enough that they feel like they need to sit on their hands and wait." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management

""So far, U.S. businesses have absorbed the tariff costs, as revealed in many corporate earnings reports. It's only a matter of time before tariff costs make their way through to consumers if businesses want to maintain margins and profitability. We expect at least two rate cuts between now and the end of the year. The Fed is under immense pressure to move off their holding pattern and the data is starting to align with a move towards lower interest rates, which would provide an insurance policy against a slowing economy." – Skyler Weinand, Chief Investment Officer at Regan Capital

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Speculation about how big the Fed rate cut will be this fall has seen renewed vigor following the release of the July jobs report, which came in much weaker than expected.

Outsize cuts to the previous two months' worth of jobs data and a rising unemployment rate underscore a weakening in the labor market — and quickly raised expectations for the Fed to resume cutting interest rates sooner rather than later.

Heading into the August 1 release of the monthly jobs report, the odds of a September rate cut were low — falling sharply after the July Fed meeting.

The Federal Open Market Committee (FOMC) chose to keep rates unchanged for a fifth-straight meeting in July. In its policy statement, the central bank's rate-setting committee stated that "the unemployment rate remains low, and labor market conditions remain solid."

The main concern for the Fed was the other side of its dual mandate: a "somewhat elevated" level of inflation, and uncertainty around how President Donald Trump's tariff policies would impact the rate of price growth.

The committee concluded that keeping the federal funds rate at its current range of 4.25% to 4.5% was appropriate to "guard against inflation risks, as Federal Reserve Chair Jerome Powell stated in his July 30 press conference.

However, Powell noted that "there's also a downside risk to the labor market." Specifically, the Fed chair pointed to "a slowing in job creation," as well as "a slowing in the supply of workers."

Powell also said the central bank had "made no decisions about September," and that it needs to see the totality of two months' worth of inflation and employment data before it can make any decision on monetary policy. This sent rate-cut odds plummeting.

On July 31, the day after the July Fed meeting, the chance for a September rate cut stood at 38% — down from 73% the previous week.

How large will the next Fed rate cut be?

At last check, though, CME FedWatch was indicating 85% odds the Federal Reserve will cut rates by a quarter-percentage point (0.25%) at its September 16-17 gathering.

This sharp spike came courtesy of a dismal update on the labor market the morning of August 1. Specifically, the Bureau of Labor Statistics said the U.S. added 73,000 jobs in July, missing economists' estimate for 100,000 new jobs. Figures for May and June were downwardly revised by a collective 258,000.

The unemployment rate also ticked higher to 4.2% from 4.1% in June.

"The downward revisions were the most revealing in this month's job report," says Jeffrey Roach, chief economist for LPL Financial. "As noted earlier, business demand for labor is slowing, adding uncertainty to the growth trajectory for the latter half of this year."

Roach says that given this weakness in the labor market, "investors will recalibrate rate expectations. This solidifies our view that the Fed could cut rates in September."

In addition to a September rate cut, futures traders are now pricing in a 60% chance the Fed will cut by an additional quarter-percentage point in October.

A combined half-point reduction in interest rates this fall would bring the federal funds rate to a range of 3.75% to 4.00%.

CME FedWatch is also showing majority odds for a quarter-point rate cut at the FOMC's December 9-10 meeting (technically, still fall), which would bring the fed funds rate to a range of 3.00 to 3.25% – its lowest level since September 2022.

All this is subject to change — especially when there are several more economic reports due between now and the next Fed meeting.

Why should investors care about interest rates?

The path of interest rates has real-life implications for people — impacting everything from the amount you pay on a car loan to the rate you're charged on your credit card to your retirement planning.

Interest rates have an impact on investors, too. Lower rates tend to boost bond prices — and push bond yields down.

Rate cuts are generally considered good for the stock market.

"Lower interest rates: Stimulate economic growth, which boosts corporate earnings; reduce borrowing costs, which improves profit margins; and make stocks more attractive relative to fixed-income alternatives," writes Kiplinger contributor Charles Lewis Sizemore, CFA, in his feature "How to Invest for a Fall Interest Rate Cut by the Fed."

Tech stocks and small-cap stocks often benefit the most from low interest rates, considering these companies are more reliant on future earnings expectations and can borrow money more cost-effectively when rates fall.

Tactical investors looking for broader exposure should take a closer look at these exchange-traded funds (ETFS) that could benefit from rate cuts later this year.

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The first half of 2025 was spent waiting for the Federal Reserve to resume dropping its benchmark interest rate.

Yes, following a full point-reduction to the federal funds rate's target range across three cuts in 2024, the Federal Open Market Committee (FOMC) signaled a slower pace of play earlier this year.

But, under pressure from President Donald Trump and the White House as well as in response to moderating inflation and a weakening labor market, lower interest rates became a theme in the second half of the year.

We're awaiting a third straight rate cut of 25 basis points at the December Fed meeting.

But there's still time for tactical investors to get in front of lower interest rates by entering a number of exchange-traded funds (ETFs) that, for one reason or another, would benefit from another rate cut this year and a couple more in 2026.

Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds. SEC yields reflect the interest earned after deducting fund expenses for the most recent 30-day period and are a standard measure for bond and preferred-stock funds.

Data is as of December 8.

Will rates fall? Perhaps this fall.

As most Wall Street economists expected, the Fed responded to a slowing labor market with a quarter-point cut to the target range for the federal funds rate in September. The Fed followed up in October by trimming its benchmark by another 25 basis points.

Although market participants are optimistic about another 0.25% move, they wonder whether it means more cuts in 2026.

"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.

Investors, traders and speculators are almost 90% certain of a December rate cut, but that 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.

Absence "of complete economic data due to the catch-up from the extended government shutdown also makes reaching conclusions difficult."

As of December 8, CME FedWatch, which uses 30-day federal funds futures prices to track the probabilities of changes to the central bank's benchmark rate, projects an 88% chance we'll see another 25-basis-point rate cut in December, with probabilities of 68% and 35% for follow-up cuts in January and March.

All this is just projection and analysis, with some price action involved. Meanwhile, forecasts for the next Fed meeting are clouded by that government-shutdown-created data gap.

Still, if you believe "full employment" will take precedent over "price stability," and you're a bit more active with your portfolio than the average buy-and-holder, there are a few ETFs you can consider buying in advance of more rate cuts.

Vanguard Short-Term Bond ETF

• Assets under management: $39.2 billion
• SEC yield: 3.8%
• Expenses: 0.03%, or $3 annually for every $10,000 invested

Normally, such a list would be chock full of bond ETFs of varying lengths because as rates on new bonds decline, prices of existing bonds generally improve.

While the fed funds rate has more of a direct impact on short-term interest rates, long-term rates (over time) also tend to move in the same direction more often than not.

But we're only listing two, as this time might be different. Here's what David Payne, economist with The Kiplinger Letter, says in his latest interest-rate outlook:

"Bond investors' concern that an economic slowdown looms is shown by the fact that current one- to seven-year Treasury notes have lower yields than short-term Treasury bills, which mature in a few months. But 20- and 30-year bond yields have picked up more than the 10-year yield has in recent months, indicating that both long-term inflation and government deficits are a rising concern among bond traders."

For now, we're likely safer looking at the short end of the yield curve, even if it won't give us the kind of wiggle longer-term bonds theoretically could.

The Vanguard Short-Term Bond ETF (BSV) is a dirt-cheap index fund that provides extremely broad exposure to investment-grade short-term debt.

The fund invests in more than 2,900 bonds with an average maturity of from one to five years; the portfolio's current average effective maturity is a hair below three years.

The lion's share (70%) of BSV's assets are invested in U.S. Treasuries or government agency debt, with another 25% in domestic corporate issues, and the remainder in dollar-denominated international bonds.

Duration, a measure of risk, is a low 2.6 years. That effectively means that for every one-percentage-point increase in market interest rates, BSV would decline by 2.6%, at least in the short term. That works the other way, though, as a one-point decline in rates would lift BSV by 2.6%.

That's not nearly as much motion as you'd get from a longer-term bond fund, but as mentioned above, longer-term bond funds might not react much to a September rate cut; BSV would appear to provide a better chance of enjoying at least some upside.

It's also a fairly stable fund, given its high quality and short duration, and it yields a respectable 3.8% right now.

Learn more about BSV at the Vanguard provider site.

Fidelity Total Bond ETF

• Assets under management: $22.9 billion
• SEC yield: 4.5%
• Expenses: 0.36%

If you wanted to be more aggressive without completely selling out to the long end of the yield curve, consider an intermediate-term bond ETF such as the Fidelity Total Bond ETF (FBND), one of two products on this list that merit inclusion in the Kip ETF 20.

More specifically, if one cares about Morningstar terminology (and we do), FBND is an intermediate core-plus bond fund.

These funds will mostly own investment-grade U.S. debt, including government, corporate and securitized debt. But they have more flexibility than core funds to look at other types of bonds, including corporate high-yield ("junk"), emerging-markets debt, bank loans and more.

The "intermediate" part refers to a duration of from 3.5 to six years; if duration isn't available, average effective maturities of four to 10 years.

In short, these funds are more aggressive than the likes of BSV in several ways.

The Fidelity Total Bond ETF's eight-manager team has compiled a portfolio of more than 4,400 predominantly investment-grade bonds.

Despite a pretty long leash, FBND is largely sticking to the "core" categories right now, with a roughly even three-way split of securitized, corporate and government debt (and a sprinkling of cash). That's largely investment-grade, but not entirely. A little more than 10% of those bonds have junk ratings.

An average weighted maturity of almost nine years and a duration of six years both put FBND on the longer end of the intermediate-term spectrum. If longer-term bonds don't respond to a Fed rate cut, FBND might not do much … but if they do, it has a lot more upside potential than BSV.

At least you're getting paid 4.5% annually to wait and see.

Learn more about FBND at the Fidelity provider site.

Schwab U.S. Dividend Equity ETF

• Assets under management: $71.2 billion
• Dividend yield: 3.8%
• Expenses: 0.06%

Another market principle is that the lower interest rates (and thus bond yields) go, the more attractive dividend stocks look.

If your primary concern is income, a 4% yielding dividend stock (which can be susceptible to market volatility) won't look nearly as good as the 4% that you can get out of even short-term bonds right now, and they tend to be a lot less volatile.

But if all interest rates head lower, and even if just short-term rates decline, the Schwab U.S. Dividend Equity ETF (SCHD) and its nearly 4% yield will look increasingly tempting.

SCHD tracks the Dow Jones U.S. Dividend 100 Index, a group of 100 dividend stocks that have paid a cash distribution for at least 10 straight years. Components are also screened by metrics including yield, dividend growth, return on equity and free cash flow vs total debt (free cash flow is the money left after operating expenses and spending on assets).

Said differently, SCHD prioritizes above-average but sustainable dividends.

This float-adjusted market cap-weighted portfolio is populated with big, value-oriented blue chip stocks, with top holdings, including the likes of Merck (MRK), Chevron (CVX) and Cisco Systems (CSCO).

Learn more about SCHD at the Schwab provider site.

Vanguard Real Estate ETF

• Assets under management: $33.7 billion
• Dividend yield: 3.5%
• Expenses: 0.13%

Another area of the equity market that benefits from declining interest rates is the real estate sector. Real estate investment trusts (REITs) participate in the same competition for attention from income investors.

The lower bond yields are, the more attractive REITs' traditionally high yields are. And REITs tend to do a lot of borrowing for activities such as acquiring more real estate; higher rates raise their cost of borrowing, while lower rates reduce it.

REIT funds such as the Vanguard Real Estate ETF (VNQ) could be appealing buys ahead of a Fed interest-rate cut.

VNQ is an index ETF that currently holds more than 150 REITs representing a broad swath of U.S. (and a little international) real estate. Exposure includes retail, residential and office property as well as data centers, warehouses, self-storage units, even driving ranges.

It's also market cap-weighted, so top holdings are real estate giants, including communications infrastructure play American Tower (AMT), data services REIT Digital Realty Trust (DLR) and mall specialist Simon Property Group (SPG).

Real estate tends to be one of the highest-yielding (if not the highest) market sectors, but VNQ tends to deliver more income than most other big-name REIT ETFs. Currently, it sports a 3.5% yield.

That, and longevity, are among the reasons VNQ is the largest REIT ETF despite having a slightly more expensive annual fee than many of the other big providers' real estate offerings.

Learn more about VNQ at the Vanguard provider site.

Avantis U.S. Small Cap Value ETF

• Assets under management: $19.8 billion
• Dividend yield: 1.7%
• Expenses: 0.25%

Some small-cap value bulls are optimistic that the strategy's fate is turning around. Although rates account for some of the tale, they're not the whole story.

Small-cap companies in general are sensitive to interest rates, in part "because of difficulty developing new banking relationships and difficulty accessing alternative sources of financing," says Goldman Sachs Research.

That's also because smaller companies sometimes have to rely on shorter-term, floating-rate debt.

Higher interest rates constrain small caps' finances, while lower interest rates give them breathing room. Unsurprisingly, historical performance shows that small companies tend to do much better following a rate cut.

Aberdeen Investments research shows that, on average, small caps have delivered a total return of 26.6% in the 12 months following a Fed rate cut vs 22.4% for midcaps and just 15.6% for large-cap stocks.

But small caps are also as sweetly priced as you could want right now. The gap in forward price-to-earnings (P/E) between large and small caps is greater than it has been since the dot-com bubble was bursting.

That also marked the start of a roughly seven-year period of small caps racing past large caps, and during that time, small-cap value more than doubled up its growth cohorts.

While there are numerous inexpensive indexed options out there, you might want to consider the actively managed Avantis U.S. Small Cap Value ETF (AVUV).

A five-manager team looks for small companies with high profitability ratios that trade at attractive valuations. This is a large portfolio of nearly 800 companies such as aircraft lessor Air Lease (AL) and discount store chain Five Below (FIVE).

Avantis, a division of American Century Investments, isn't exactly a household name. Its $90 billion in assets under management (AUM) across all products wouldn't crack the top 25 of individual ETFs by assets.

However, AVUV is the second-largest small-cap value ETF by assets, at nearly $20 billion, and accounts for roughly 22% of Avantis' AUM!

Why? Because so far, it has worked. This small-cap ETF started trading in the second half of 2019.

Since then, it has delivered a trailing five-year return that's better than 94% of its Morningstar category peers. And it earned a Silver Medalist rating because it "diversifies well and balances its exposure to the quality and value risk factors."

That, according to Morningstar Senior Analyst Daniel Sotiroff, "should keep the fund competitive in most market environments."

Learn more about AVUV at the Avantis provider site.

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The Federal Reserve will keep short-term interest rates unchanged when it concludes its next meeting, experts say, as solid economic growth, moderating inflation and a "low-hire, low-fire" labor market support current policy.

Of more interest is how Fed Chair Jerome Powell handles the press conference following the release of the central bank's policy statement. 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. While Powell could remain on the Fed board for the remainder of his full term, he could also choose to step aside entirely.

As for the state of the economy, fourth-quarter gross domestic product (GDP) is tracking at a strong growth rate of 5.4%, according to the Federal Reserve Bank of Atlanta's GDPNow model.

Meanwhile, the jobs market remains sluggish but steady. As for inflation, while it's still above the Fed's long-term target, recent readings have come in better than expected. Fears of a tariff-driven surge have thus far proven unfounded.

Matthew Luzzetti, chief U.S. economist at Deutsche Bank, suggests Powell’s press conference could veer into "non-economic issues," such as current threats to the Fed's independence. On the "fundamental" side, Luzzetti expects Powell to describe policy as "well positioned," as it is plausible to argue that rates are currently neutral.

"Powell might also sound somewhat more sanguine on the labor market, while still emphasizing downside risks," Luzzetti adds.

As of this writing, market participants expect the Fed's rate-setting committee, the Federal Open Market Committee (FOMC), to stand pat on the federal funds rate.

Indeed, as of January 26, interest rate traders assigned a 97% probability to the FOMC keeping the target rate steady at 3.5% to 3.75%, according to CME Group's FedWatch.

With the Fed set to leave rates unchanged at an increasingly complex time, we turned to economists, strategists and other experts for their thoughts on monetary policy going forward. Please see a selection of their commentary, sometimes edited for brevity or clarity, below.

Fed rate decision: what the experts say

"After three straight rate cuts last year, the Federal Reserve is widely expected to keep interest rates unchanged at the next meeting. We may see another dissent (in favor of an additional cut) from Governor Miran before his term ends on January 31, but the real focus will be on Chair Powell's press conference. Investors want to know whether this will simply be a one-meeting 'pause' or the beginning of a longer hold. Right now, the economy still looks surprisingly sturdy." – Larry Adam, chief investment officer at Raymond James

"We expect the Fed to hold rates steady and present a somewhat more upbeat view about the economy through the policy statement and Chair Powell's press conference. The statement is likely to upgrade the growth assessment to 'solid,' note tentative evidence that unemployment has stabilized, and hint at an improving balance of risks to the outlook." – Matthew Luzzetti, chief U.S. economist at Deutsche Bank

"Markets are now not really expecting a Fed rate cut until June, or the first meeting after Jay Powell has left the Chair. We remain a bit more dovish than the market, expecting three quarter-point trims this year. True, real GDP growth expectations are being lifted, but it's coming from better productivity, and the job market remains sluggish while core inflation is stable to lower." – Douglas Porter, chief economist at BMO Capital Markets

"We don't expect to learn a lot at the January FOMC meeting. The Fed is on hold but remains data dependent. The balance of risks around the two mandates hasn't changed much since December. Chair Powell's press conference might be dominated by questions about politics rather than policy. On the latter, however, market pricing creates risks of a dovish surprise." – Aditya Bhave, U.S. economist at BofA Securities

"We expect no policy change in the January meeting. Our base case anticipates 25 to 50 bps of additional easing this year, moving towards neutral and generally supporting our constructive economic and market outlook." – Lauren Goodwin, chief market strategist at New York Life Investments

"While no change in interest rates is expected, markets will be highly attentive to the tone of the statement and Chair Powell's press conference. Any adjustment in how the Fed characterises inflation, labour market conditions or downside risks to growth could quickly influence rate-cut expectations. A message that reinforces patience and acknowledges cooling momentum would likely support equities and pressure the dollar, while a more cautious or hawkish tilt could revive volatility across risk assets." – Daniela Hathorn, senior market analyst at Capital.com

"We expect the Federal Reserve to hold rates steady at the January FOMC meeting, following three consecutive rate cuts in 2025, as policymakers take time to assess the impact of past easing. Assuming inflation continues to trend lower and growth remains resilient, we see room for moderate rate cuts in 2026." – Gargi Chaudhuri, chief investment and portfolio strategist at BlackRock

"The FOMC is widely expected to leave the fed funds rate unchanged at its January meeting. We expect the post meeting statement and press conference to signal maximum flexibility as the Committee strives to keep its options open. Our forecast remains for two 25 bps rate cuts at the March and June meetings, but the risks to our forecast look increasingly skewed toward later and possibly less easing this year." – Sarah House, senior economist at Wells Fargo

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When the Federal Reserve adjusts the federal funds rate, the effects ripple through every corner of the economy.

For financial professionals, grasping these dynamics is essential to helping clients manage their money wisely, especially those planning for or living in retirement. Understanding what the federal funds rate is — and how it influences investments, loans and consumer behavior — helps advisers develop strategies that bolster client outcomes.

What is the federal funds rate?

The federal funds rate is the interest rate at which banks lend reserves to one another overnight to maintain required reserve balances. Set as a target by the Federal Open Market Committee (FOMC), this rate serves as the Federal Reserve’s primary tool for steering economic conditions.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Here’s what you should know:

Economic growth tool

• Low interest rates encourage borrowing and spending, fueling economic expansion.
• High rates discourage borrowing, curb spending and reduce inflation to stabilize the economy.

Market impact. Though the Fed sets a target range, the actual rate depends on the supply and demand for overnight loans in the banking system.

Grasping the federal funds rate’s role provides the foundation for understanding how the rate affects consumers and markets.

The federal funds rate's ripple effects

Loans and borrowing

The most immediate impact of a rate adjustment is felt in borrowing costs for consumers and businesses. A rate hike means loans become more expensive, potentially impacting client decisions on financing.

Mortgages

• Mortgage rates closely follow changes in the federal funds rate. For example, 30-year fixed mortgage rates jumped from 2.68% in late 2020 to over 7% by September 2023 as the Fed raised rates.
• Advisers should help clients considering a home purchase or refinance lock in fixed rates before potential hikes worsen affordability.

Consumer credit. Credit card balances, car loans and home equity loans become pricier with each rate increase. Alert clients to rising costs that can strain their budgets.

Debt management advice. Encourage clients to focus on paying down high-interest debt during rising-rate periods to help reduce financial strain.

Investments

Rate changes also influence market performance, presenting potential opportunities and risks in client portfolios.

Stocks. Higher rates often signal lower corporate profits due to increased borrowing costs, potentially spooking equity markets. Defensive or dividend-paying stocks may provide stability.

Bonds. Bond prices move inversely to interest rates. Long-term bonds may lose value in a rising-rate environment, while shorter-duration bonds can offer more flexibility.

Alternative investments. Rising rates don’t impact all asset classes equally. Commodities, for example, may gain during inflationary periods as higher input prices drive performance.

Helping clients rebalance their portfolios with these factors in mind can mitigate risks and uncover growth potential.

Mortgage rates and housing

For clients planning real estate transactions, the federal funds rate plays a pivotal role in determining affordability.

Rate sensitivity. Mortgage rates have climbed alongside the Fed’s rate increases. Timing a purchase before another rate hike can help save clients significant money over the life of a loan.

Advising retirees. Retirees downsizing or moving should factor in how rate changes might impact their fixed budgets and retirement cash flow.

Inflation, CPI and the federal funds rate

Inflation is often central to the Fed’s rate decisions. Managing rising inflation (measured by the consumer price index, or CPI) requires a careful balance.

Inflation control. The Fed raises rates to discourage borrowing and reduce spending, cooling inflation. For instance, as the CPI hit 8.3% in early 2022, the Fed took aggressive rate hike measures.

Client concerns. Rising rates reduce purchasing power, especially for retirees. Advisers must help clients adjust for cost-of-living increases by including inflation-protected investments, such as TIPS (Treasury inflation-protected securities).

Educating clients about how inflation ties directly to Fed policy helps them understand the rationale behind portfolio adjustments and spending changes.

Retirement planning in a rising-rate environment

Retirement planning becomes more complex when rates rise, but proactive strategies can shield clients from the brunt of these challenges.

Here are three key areas to consider addressing with clients:

1. Reassess income plans:

• Shift bond allocations toward shorter durations to help reduce exposure to rate-driven declines in value.
• Incorporate dividend-paying stocks, real estate income and other alternative income streams for diversification.

2. Keep debt in check. Retirees should aim to minimize high-interest debt, such as credit cards or variable-rate loans, which become more expensive as rates climb.

3. Inflation-protected investments. Consider assets like TIPS or inflation-linked annuities that specifically hedge against rising costs.

These strategies keep portfolios resilient while helping to ensure retirement income keeps pace with living expenses.

Interested in more information for financial professionals? Sign up for Kiplinger’s new twice-monthly free newsletter, Adviser Angle.

Actionable strategies for financial professionals

Navigating client relationships in an era of rising rates requires clarity, experience and tailored solutions.

Be proactive. Regularly review portfolios to align with new market and economic conditions. Identify areas of risk, such as long-duration bonds, and offer suitable alternatives.

Educate effectively. Translate complex financial actions into digestible guidance. For instance, explain how locking in mortgage rates or moving to shorter-term bonds can impact their bottom line positively.

Tailor recommendations. Different clients require different approaches. Work with retirees on income-stability strategies while guiding younger clients on taking advantage of volatility for long-term growth.

Communicate transparently. Build trust by staying open and approachable. Help clients make informed decisions by explaining the big picture without using confusing jargon.

The bottom line

The federal funds rate plays a critical role in the financial health of your clients. By understanding its impact on loans, investments, inflation and spending, financial professionals can provide invaluable guidance that helps protect and enhances client wealth.

Whether preparing retirees for steady income needs or advising families on rising borrowing costs, your experience in navigating Fed actions will help foster stronger client relationships and deliver real value.

Stay informed, stay proactive and, above all, help your clients thrive in any economic climate.

Investing involves risk, including the potential loss of principal. Any references to protection, safety or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the issuing carrier.

Our firm is not affiliated with the U.S. government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Past performance is not indicative of future results. 4381705 – 4/25

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

In times of economic uncertainty, all eyes are on the stock market.

In April, investors saw the S&P 500 Index decline 18.9% from its February peak. The index has recovered some of its losses, though it remains volatile.

During this volatile period, there has been much attention paid to the fluctuations of the 10-year Treasury bond.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

This instrument is widely recognized as a crucial indicator of the broader economic landscape and plays a pivotal role in the day-to-day operation of the global financial markets.

Its influence extends beyond the confines of government finance, impacting everything from mortgage rates to the overall cost of borrowing. This makes the 10-year Treasury an essential watchpoint for investors, economists and policymakers alike.

A quick primer on Treasury bonds

The federal government issues Treasury bonds to finance its operations, with maturities ranging from four weeks to 30 years. Ten-year Treasury bond investors are paid interest semiannually, known as the coupon rate, and receive their principal back at maturity.

During the bond’s holding period, however, investors may notice that the fair market value of their Treasury bonds fluctuates.

Usually, these movements are in response to interest rate changes. The key point for investors to remember is that bond prices and interest rates move in opposite directions.

As a bond’s maturity approaches, these fluctuations tend to be less dramatic.

What happened in April?

Since the stock market began its sharp drop in early April, the price of 10-year Treasury bonds has also declined. This development is curious, since during times of economic uncertainty, investors often seek the safety of Treasury bonds.

This increased investor demand should have resulted in higher, not lower, Treasury bond prices.

According to Steve Preikschat, client portfolio manager at Janus Henderson Investors, “Tariffs and the associated inflation risks are the primary culprits of the move higher in 10-year Treasury rates, (resulting in lower valuations) as investors demand higher yield compensation for lending capital in this uncertain environment.”

Erika Oquist, Janus Henderson Investors’ fixed-income specialist, further explains, “If the market is anticipating higher inflation, today’s 10-year Treasury coupon payments may not look so attractive in a few years. This sentiment has dampened demand, driving valuations lower.”

Next steps for investors

Our advice to bond investors is similar to what we’d recommend for stock investors: We think the best course of action is to remain patient and avoid making any rash decisions.

As Oquist points out, “Despite the fluctuations observed in April 2025, the fundamental attributes of Treasury securities in providing stability and safety in investment portfolios remain unchanged.”

Preikschat adds, “The silver lining of the move higher in 10-year Treasury yields (lower prices) is that today’s yields are extremely attractive for investors looking to add to their bond holdings.”

Both of our in-house fixed-income experts remain bullish on the benefits of properly diversified portfolios.

Despite the recent drop in prices, bonds have squeezed out about a 1.73% return so far in 2025 (as of May 13), as measured by the Bloomberg U.S. Aggregate Index, which tracks a basket of government and investment-grade corporate bonds.

In fact, bonds have performed exactly as advertised in 2025, buoying portfolios during a difficult period for stocks.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.

According to Oquist, “Portfolios should be built for the long term, and that includes both growth-oriented investments as well as safer investments to help manage the risks and uncertainties inherent in the financial markets.”

Final words

Eventually, this recent bout of volatility in both the stock and bond markets will pass (although no one really knows when).

Ben Rizzuto, wealth strategist at Janus Henderson, recommends that investors “review their financial plan and remind themselves of the goals they created for the future. This exercise can often help investors transition from a short-term, emotional mindset to a calmer, more future-oriented outlook.”

For investors who have not created a financial plan, Rizzuto suggests now is a great time to do so.

Our experts agree on one thing — investors who exercise patience are likely to benefit over the long term.

The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information. Janus Henderson is a trademark of Janus Henderson Group plc or one of its subsidiaries. © Janus Henderson Group plc.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The May Fed meeting kicked off on Tuesday, May 6, and concluded Wednesday, May 7, with the central bank's latest policy decision.

The Federal Open Market Committee (FOMC) did not cut interest rates this time around, as expected.

And while the FOMC statement called attention to increasing uncertainty about the economic outlook, Federal Reserve Chair Jerome Powell said the U.S. economy remains strong enough at the moment to allow patience on the part of policymakers.

The Kiplinger team reported live on the May Fed meeting, bringing you the news and our expert analysis of what it could mean for the economy and your money. Join us again in June for the next Fed meeting.

| After the Fed Meeting, Seven High-Yield Savings Accounts Worth Your While | What's Happening With Trump Tariffs? New Rates and Trade Talks | When Is the Next Fed Meeting? |

Can Trump fire Powell?

In addition to upending the global economy with his tariffs, President Donald Trump has introduced additional uncertainty for financial markets by undermining the independence of the Federal Reserve and Fed Chair Jerome Powell in a series of public attacks.

His behavior could render moot whatever the result of a pending Supreme Court review of a 90-year-old case that could answer the question, can Trump fire Powell?

Last week, President Trump called Chair Powell a "major loser" and suggested the Fed cut interest rates last September to help former President Joe Biden.

In Michigan on Tuesday to celebrate the first 100 days of his second administration, the president refreshed his assault.

"Interest rates came down despite the fact that I have a Fed person who's not really doing a good job but I won't say that, I want to be very nice," Trump told his rally crowd.

"I want to be very nice and respectful to the Fed," he continued. "You're not supposed to criticize the Fed, you're supposed to let him do his own thing.

"But," he concluded, "I know much more than he does about interest rates, believe me."

- David Dittman

Q1 GDP unexpectedly declines

In its initial estimate of first-quarter gross domestic product (GDP), the Bureau of Economic Analysis said economic growth decreased at an annual rate of 0.3% as imports jumped 41.3%.

If this holds through to the third reading, it will mark the biggest drop in GDP since Q1 2022. Economists expected a 0.4% increase in economic growth.

"The economy weakened in the first quarter," says Bill Adams, chief economist for Comerica Bank. "Businesses and consumers pulled forward purchases to get ahead of tariffs in the first quarter, and throttled back spending and investment plans in other areas."

Adams notes, though, that today's reading doesn't tell us much about the current state of the economy, given all of the announcements and changes that have taken place since the start of the month.

The economist feels the uncertainty will keep the Fed on hold this month, but he says a June rate cut is on the table.

- Karee Venema

The Fed is unlikely to cut interest rates this time

The Federal Reserve is not likely to change rates at its meeting next Wednesday, despite the modest contraction in first-quarter GDP.

Price and wage data through March have been encouraging, but the Fed is concerned that price increases caused by April tariffs may raise inflation expectations. There has been evidence in consumer sentiment surveys of exactly that.

If the economic contraction gets worse, the Fed could cut rates a quarter point at its June 18 meeting, or the one after that, on July 30.

However, that will be determined by how the Fed weighs the balance of risks between a slowing economy and rising inflation.

- David Payne

How will the March PCE report impact the Fed's interest rate decision?

In March, both headline PCE and core PCE, which excludes volatile food and energy costs, were flat month over month, a slower pace than what was seen in February.

Year over year, headline PCE rose 2.3%, faster than the 2.1% increase economists expected. Core PCE also came in higher than anticipated, at 2.6%.

The data also showed a sharp uptick in consumer spending (+0.7% in March vs 0.1% in February).

"This inflation report, coupled with this morning's disappointing GDP figures, creates significant pressure on the Federal Reserve ahead of next week's crucial policy meeting," says David Hernandez, crypto investment specialist at 21Shares.

Hernandez adds that while markets have priced in no change to interest rates at the next Fed meeting, "today's mixed economic signals introduce fresh uncertainty into the equation."

According to CME FedWatch, futures traders are currently pricing in a 94% chance the FOMC holds rates steady next Wednesday. The odds for a June rate cut are at 60%.

- Karee Venema

What will the April jobs report say about the labor market?

The April jobs report will be released ahead of this Friday's open. It will give Federal Reserve officials the first glimpse of how Trump's retaliatory tariff announcement and reciprocal levies from several U.S. trade partners may impact the hard data.

"Hiring is often delayed when consumers are concerned about losing their jobs, or when businesses don’t know if there will be a positive return to investing in additional workers," writes David Payne in the Kiplinger jobs outlook.

In March, nonfarm payrolls rose by a robust 228,000, while February's jobs growth was upwardly revised.

This time around, Goldman Sachs economists believe the U.S. added a slightly above-consensus 130,000 new jobs in April, which they say reflects "a still-moderate pace of job creation."

The group also expects government payrolls to be unchanged, "as a likely decline in federal government positions offsets increases at the state and local levels.

And they say the unemployment rate stayed at 4.2%.

- Karee Venema

Fed officials signal support for a pause

Between the March and May Fed meetings, several Fed officials have signaled support for keeping the federal funds rate at its current range of 4.25% to 4.5%.

Speaking on April 23, Cleveland Fed President Beth Hammack said it is too soon to consider a rate cut in May, but the central bank could move later if there is clear and convincing evidence of a sharp labor market decline.

Hammack added that there remains a very high bar set for emergency rate cuts – the most recent occurred at the onset of the pandemic in March 2020 – and there is not enough of a market or economic breakdown at the moment to support one.

Meanwhile, on April 24, Fed Governor Christopher Waller said he doesn't expect the impact of tariffs to hit until July. However, Waller added that a significant decline in the labor market could encourage a rate cut sooner rather than later.

"To be sure, Fed officials have a strong consensus for not moving in the near term as the economic impact from tariffs is still unfolding and other aspects of the Administration's policies remain to be seen – namely, the upcoming tax bill being debated in Congress," write Deutsche Bank economists.

They anticipate the biggest impact from tariffs – higher inflation and lower growth – to occur in the back half of the year and do not believe the Fed will resume rate cuts until December.

- Karee Venema

Who votes on Fed rate cuts?

The Federal Open Market Committee (FOMC) – the Federal Reserve's policy-setting group – has 12 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 Adriana Kugler
• 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

Initial jobless claims are on the rise

The "price stability" part of the Federal Reserve's dual mandate is more front-of-mind for investors, traders and speculators as President Trump's tariffs begin to impact the global economy.

"Full employment" has been less of a concern, even amid slowed-down hiring and stagnating wage growth.

But the Department of Labor reported Thursday morning that initial jobless claims increased by 18,000 to 241,000 during the week ending April 26, well above a consensus estimate of 223,000.

"The Fed is far too sanguine on the labor market given the incoming data," writes Renaissance Macro Research Head of Economics Neil Dutta.

Initial claims for the prior week were revised from 222,000 to 223,000. The four-week moving average increased by 5,500 to 226,000. The previous week's average was revised up by 250 from 220,250 to 220,500.

Continuing claims increased to 1.916 million for the week ending April 19, their highest level since 2021.

According to Dutta, "The bigger story is that continuing claims keep rising roughly 5% year-over-year. As job finding rates remain low, spells of unemployment go up."

The "meaningful increase" in initial claims indicates "that continuing claims might be rising a bit more in the weeks ahead."

- David Dittman

The Bank of Japan cuts its growth forecast

On Thursday, the Bank of Japan (BOJ) cut its growth forecasts for this fiscal year, citing "extreme" uncertainty related to global trade policies.

The central bank now expects the Japanese economy to grow just 0.5% in the fiscal year ending March 31, 2026, down from 1.1% in January. It anticipates a slightly higher 0.7% growth rate for the following fiscal year.

The BOJ also kept interest rates unchanged at 0.5% for the second straight meeting.

Japan's officials are currently undergoing trade negotiations with the Trump administration, hoping to hash out a deal to lower tariffs on the country's exports of its auto and electronics parts.

"The series of tariffs must be reconsidered, as they are currently beginning to cause substantial damage to our nation's economy," said Ryosei Akazawa, Japan's economic minister, when he arrived in the U.S. earlier this week.

"We want to make as much progress as possible toward an agreement that fosters a win-win relationship," Akazawa added.

- Karee Venema

Treasury Secretary Bessent chimes in on rate cuts

Does the bond market agree with President Trump about rate cuts?

"Yes," according to Treasury Secretary Scott Bessent. "We are seeing that two-year rates are now below fed-funds rates," Bessent said Thursday morning on Fox Business. "So that’s a market signal that they think the Fed should be cutting."

Bessent had previously refrained from commenting on Federal Reserve policy.

As Nick Timiraos of The Wall Street Journal reports, "Two-year Treasury yields were below the Fed's short-term rate for all of 2023 and much of 2024."

The market saw the Fed engineering "a soft landing that brought inflation down without a recession," Timiraos explains, "or that inflation would fall and the Fed would cut rates because the economy fell into a recession."

Amid recent incoming data suggesting the economy is weakening, 30-day fed funds futures prices show expectations for as many as four and even five rate cuts this year.

The market sees a greater than 95% probability the Fed will hold next week. The FOMC will meet five more times in 2025 after the May meeting.

- David Dittman

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, April 26, and until Thursday, May 8, 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 preceding an FOMC meeting and end the Thursday following a meeting. An unofficial practice that began in the 1980s was formalized in 2011 and reaffirmed in January.

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.

During the current quiet period, the S&P 500 has rallied 2.0%, the Dow Jones Industrial Average 2.1% and the Nasdaq Composite 2.6%.

- David Dittman

April jobs report gives the Fed more wiggle room

The April jobs report came in stronger than expected, showing the U.S. labor market is slowing but still healthy. While this is good news for the Fed, which has repeatedly said it is in no rush to cut interest rates, the heightened uncertainty from President Trump's trade war has many pushing the central bank to act sooner rather than later.

According to the Bureau of Labor Statistics, nonfarm payrolls rose by 177,000 in April. This was lower than March's downwardly revised 185,000 figure but more than the 133,000 new jobs economists expected. February jobs growth was also lowered.

The unemployment rate, which is calculated from a separate survey, remained at 4.2%.

"Although markets had braced for a slowdown in job growth – due to factors like DOGE job cuts, increased immigration reform, and soft economic indicators – private sector hiring has remained resilient," said Kevin O'Neil, associate portfolio manager and senior research analyst for Brandywine Global.

O'Neil adds that while the stronger-than-expected employment data "gives the administration more breathing room in its trade negotiations," it also suggests that "the Federal Reserve is unlikely to shift its current policy stance in the near term."

Read more: Strong April Jobs Report Lowers Rate-Cut Hopes: What the Experts Are Saying