Many of today’s Fed headlines cite a “deep split” on the FOMC as three regional bank Presidents (Hammack, Kashkari and Logan) dissented from the Fed’s maintenance of an “easing bias” in its policy statement. We would suggest the more relevant observation is the FOMC just voted 8-4 to keep rates unchanged (Governor Miran voted for a rate cut) and maintain its easing bias despite 3.3% March CPI, 4.3% March unemployment and oil prices firmly in triple digits. Given realities of legacy debt levels and a negative U.S. national savings rate, we view probabilities for ’26 rate hikes as significantly lower than consensus.
Chair Powell departed from 75 years of Fed precedent in stating he plans to serve as Fed Governor after his term as Chair expires on May 15 for a “period of time to be determined.” Despite Mr. Powell’s self-image as a vital protector of Fed independence, Treasury Secretary Bessent immediately criticized Powell for a “violation of all Federal Reserve norms” and suggested his actions are “an insult” to incoming Chair Kevin Warsh and sitting Fed Governors. Stay tuned…
In the wake of U.S. Trade Representative Jamieson Greer’s statements last week that Mexico’s auto and steel industries should not expect relief from President Trump’s 50% aluminum/steel tariffs, Mexico’s President Claudia Sheinbaum announced Wednesday a new rule requiring all federal works projects to use steel from Mexican companies.
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