President Trump did this. I discuss five Reasons.
October 28 Meeting Synopsis
- 90.7 percent chance of Fed standing pat
- 8.1 percent chance of a quarter-point hike
- 0.1 percent chance of a two quarter-point hikes
- 1.1 percent chance of a quarter-point cut
Rate Hike vs Cut Likelihood
- The probability of any hike (quarter-point or two quarter-point) is 8.1% + 0.1% = 8.2%.
- The probability of a cut (quarter-point) is 1.1%.
- A hike is therefore 8.2 / 1.1 ≈ 7.45 times as likely as a cut.
That’s one way of slanting the observation given the odds of the Fed doing nothing is 90.7 percent.
I captured CME Fedwatch weighted target probability 5 minutes before the meeting and again today.
Weighted Average CME Fed Target Rate Probabilities
Changing December 2026 Target Rate Odds
- February 24: 3.07 percent
- March 3: 3.15 percent
- March 12: 3.45 percent
- March 18: 3.42 percent
- March 19: 3.64 percent
The March 18 numbers are about 5 minutes before the March FOMC meeting.
The March 19 numbers are 11:30 AM Mountain Time.
The Fed meeting and the press conference effectively put the expectation of a change by the Fed on hold for the entire rest of the year.
Five Reasons to Blame Trump
- Tariffs.
- Deficit Spending and the One Big Beautiful Bill Act.
- Iran war pushed up the price of oil. There is no estimate when it will end, or even what the goals are.
- It’s not just oil. Fertilizer, Natural gas, aluminum, and other commodities are impacted. Natural gas and fertilizer will impact agriculture. Knock-on impacts are everywhere.
- Trump now wants another $200 billion or more to fund the war he just started. More deficit spending will pressure rates.
All five points are inflationary. Tariffs are also recessionary.
At the FOMC press conference, Powell specifically pointed out tariffs. But he stated uncertainty about tariffs and literally everything else too, including AI and energy.
Powell thinks services inflation is under control. I don’t and the latest Producer Price Index reports don’t either.
Observation of the Day
A Fed that admittedly knows nothing is unwilling to do anything.
But consider the bright side. Trump says “Look at all the money we are making” after pledging to reduce energy bills in half and starting no more wars.
Flashback January 20, 2026: Might the Next Interest Rate Move by the Fed Be a Hike?
It’s time to discuss the real possibility of a renewed surge in inflation.
Related Posts
January 27, 2026: Trump Cheers a Plunge of the US Dollar “I Think It’s Great”
“Look at all the business we are doing,” says Trump.
The Fed is not in a good place, as it claims.
January 30, 2026: Dear Zoomers, Trump Says He “Wants to Drive Up Housing Prices”
Somehow, I doubt Gen Z will like this message.
March 15, 2026: US Secretary of Energy Says High Gasoline Prices Might Last Weeks
Given that diesel and fertilizer prices are soaring, I have a question.
March 17, 2026: Six Rules Suggest the Fed Should Not Be Cutting Interest Rates
The Cleveland Fed projects interest rates based on various rules.
March 18, 2026: Producer Price Index Jumps 0.7 percent, Third Straight Month of Big Increases
Services PPI surged for the third month, up another 0.5 percent.
March 19, 2026: US in Iranian Catch-22. Brent Crude Hits $119 Before Pulling Back
- Israel’s attack on Iran’s infrastructure and Iran’s counter-attack spike oil prices.
March 18, 2026: Fed Press Conference Key Point, 3 Times Powell Said “We Just Don’t Know”
“And no one else does either,” said Powell. Ponder what that implies.
Interest rates moved higher today. The 2 year US Treasury yield has broken out of its 2.5 year triangle pattern. The 30 year US bond yield is higher than any time Powell announced a rate cut this cycle. Powell and the FED will have to raise rates next meeting.
Just once comment Mish: When you use a decimal on your probability numbers,,,it conveys a rather exact prediction. I would be tempted to report it to the nearest whole number. Engineers make this mistake all the time.
Aaaand now we’re bombing Iraq:
https://www.aljazeera.com/news/liveblog/2026/3/19/iran-war-live-qatar-saudi-energy-sites-attacked-riyadh-says-trust-gone?update=4417644
Things are really picking up speed. Buckle up!
Jesus is coming, and he’s gonna be pissed.
Hegseth just said they’re going to ask for $200B for Trump’s war on Iran. Hopefully Congress will Just Say No.
They won’t and we all know it. If they did, they’d be denounced as traitors.
US debt held by the public just hit $39T today.
Is that 120% of GDP?
It’s only the public. What are they gonna do about it? We’ll put the ornery ones in our spanking new defunct Circuit City detention centers. Maybe strip them of their citizenship, so they can never leave.
The public will behave.
And Narcissist-in-Chief is SOOOO stupid as to keep NEEDLESSLY playing with fire.
“Top leaders at the Justice Department are rallying behind a US attorney’s efforts to investigate Federal Reserve Chair Jerome Powell and the White House isn’t opposing it, amping up the high-stakes clash with major implications for who will lead the central bank.
President Donald Trump had been open to the idea of dropping the probe into Powell until last Friday, when a judge rejected subpoenas issued to the central bank, according to people familiar with the matter.
But Trump, angered by the ruling and harboring a longstanding belief that the courts are stacked against him, is now believed by aides and allies to support a push to appeal, said the people, who requested anonymity to discuss private talks.”
What a DUMBASS!
Your last sentence sums it all up.
Mortgage rates are going back up. That will help slow down home price appreciation. Cutting rates probably would have caused prices to go up.
As Powel said, incomes are catching to home prices as home prices are going sideways. So that is good news for future home affordability.
I don’t see new home price sq ft prices dropping unless labor, land, and construction material prices drop, which we know….they will not drop. They may make smaller homes but the sq ft has not dropped over the past few years.
What home price appreciation?
Case Shiller prices are still rising!
We as he and the upper 5 percent
The FED should have been raising rates since last year!
Since 4.5 YEARS ago. Inflation has been above 2% for 5 years.
Do you know the debt is mostly short term and needs to be replaced within short time?With higher rates?
Not sustainable unless they bring the rates down and they let the roaring inflation kill the debt.
Mish definition of inflation, “Inflation is an increase in money supply and credit, with credit marked to market.” from: If the Velocity of Money Picks Up Will Inflation Soar? – MishTalk
Government and federal reserve officials have convinced the public by repeatedly bloviating rising prices are inflation when rising prices are one possible result of inflation. Prices may rise given other impacts such as supply shortages, upward input cost pressure or tariffs. This is why I cannot understand why tariffs are inflationary. Tariffs are a drag on the economy because they raise the price of goods imported, particularly if they are on our industrial inputs, but they do not add to money supply or credit. Tariffs being paid one way or another by the end users of the imports are a drag on the economy because they raise effective prices and the money goes to government, basically a consumer of wealth, generating very little value for the money it receives. My conclusion is tariffs are only a contributor to the stag in stagflation.
I would appreciate comments as to where my understanding is right or wrong.
“a contributor to the stag in stagflation”
You are answering your own question really. Tariffs, like any tax, (by increasing the cost of creating supply) reduces supply, the number of things you can buy relative to the $s chasing them. The central cause of inflation is inflating the money supply. Tariff’s exacerbating inflation will primarily be measurable in the period soon after they are instituted and may seem to be a one-time effect in terms of CPI measurement. Sustained inflation is generally from “money printing.”
I understand how tariffs exacerbate price increases for the end user, but that increase is a result of the tariff being applied and would occur if there were no increase in money supply of credit.
This probably should have been in the first post: measuring inflation by measuring price change is flawed because while prices can and do change with inflation, they also change as a result of other factors, money supply and credit being constant. Not defending the fed, but changing rates due to tariffs or the Iran war pushing prices up seems flawed as it was not an interest rate change that pushed them up, it was real and expected supply disruptions. If the war is financed with debt, I would expect the market would push rates higher due to increased borrowing reordering credit supply and demand. That situation would be inflationary, increasing credit.
Thanks for your replay
“If the war is financed with debt, I would expect the market would push rates higher due to increased borrowing reordering credit supply and demand. That situation would be inflationary, increasing credit.”
Dave, that situation would not increase credit or be inflationary unless the Fed monetized the debt (which they ALWAYS do). Fed borrowing would instead crowd out other borrowing and drive interest rates up, thereby curtailing spending etc. In the absence of the fascist Fed “printing” (amplified by their fascist banking system), you can’t borrow unless someone is willing to lend (to wit, increase savings).
Pretty much agree, but with fractional reserve banking credit available does increase, but the root question is how do tariffs push up inflation?
I wrote a comment about a movie on Netflix called “Breakdown: 1975” which offered a great retrospective on the oil crisis, explosion of crime, and other mayhem. I offer it as a sneak peak to what’s coming in 2026. Stagflation was a key theme in that movie and it’s what everyone is now talking about.
https://www.cnbc.com/2026/03/19/copper-joins-gold-in-broad-commodities-sell-off-theres-a-worrying-reason-behind-it.html
Everyone enjoying the golden age yet or do you want more?
Do worry, Trump will find a way to make things even worse.™
Stagflation + no jobs + civil unrest = ?
Break out the guillotines!