Stable inflation expectations enable Fed to hold rates steady: Powell

Core Insights - Short-term inflation expectations have risen due to Iran's restrictions on shipping through the Strait of Hormuz, leading to a significant increase in oil and commodity prices [3] - Brent crude oil prices surged approximately 62% from $70 per barrel to $113 per barrel since the onset of the war [3] Inflation Expectations - Household inflation expectations for the next 12 months increased from 3.4% to 3.8%, marking the largest one-month rise since April 2025 [4] - Longer-term inflation expectations remained stable, with a slight decrease of 0.1 percentage point to 3.2% in March [5] - The New York Fed reported that median inflation expectations for the next 12 months fell by 0.1 percentage point to 3% and remained steady at 3% for three- and five-year horizons [5] Federal Reserve's Position - Federal Reserve Chair Jerome Powell emphasized the importance of monitoring inflation expectations, noting that supply shocks could lead to increased public anxiety about future price pressures [6][7] - Powell stated that stable long-term inflation expectations allow the Fed to maintain steady borrowing costs while assessing the economic impact of the Iran war [7] - The Fed has kept the main interest rate between 3.5% and 3.75%, citing an uncertain economic outlook and the need to wait for clearer signs of economic effects from the conflict [7]