The odds are zero. But what about the rest of the year?
Where Is Powell?
Truth Social: Where is the Federal Reserve Chairman, Jerome “Too Late” Powell, today? He should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting! President DONALD J. TRUMP
Does Trump realize the Fed meets in 5 days?
There is no basis for a rate cut at all, let alone an emergency cut. Inflation readings are a mess, especially the PCE, and that’s the Fed’s preferred measure.
I see many reports that rates cuts are fully priced out for the year, but that’s not true.
For December, the weighed average projection is 3.45 percent. The current target is 3.50 to 3.75 percent (say 3.62).
3.45 would be a cut of 17 basis points, with 25 basis points being a quarter-point cut. So we are a bit under a full quarter-point cut priced in.
This may easily change on Friday. For the record, I do expect the December rate cut odds to drop a bit on the PCE inflation report and/or oil inflation concerns.
Might the Next Interest Rate Move by the Fed Be a Hike?
I suspect many people thought I lost my mind on January 20, 2026, when I asked Might the Next Interest Rate Move by the Fed Be a Hike?
Supporting the Stagflation View
- The price of gold, silver, and copper at record highs
- Medical insurance prices
- Wars and threats of war by Trump
- Deficit spending, which both parties want to increase
- K-Shaped Economy fueled by upper-end spending
- An AI speculation boom with no profits
- Tax refunds will support more spending
- Minimum wages hikes in 19 states will support more spending
- Trade wars
- Weak jobs
This is one sick economy led by AI, upper-end spending, and deficits.
I am not predicting a hike, but it would not surprise me much.
Contrarian View
A hike does not seem to be on anyone’s radar. So please consider Bob Farrell’s Rules of Investing.
Rule #9: When all the experts and forecasts agree – something else is going to happen.
Who else is discussing a hike?
As noted, I did not predict a hike, and I still don’t. However, I did discuss the idea, and for the right reasons.
War has made the possibility of stagflation (and rate hikes) more likely.
Related Posts
January 21, 2026: Expect a Big Divergence This Year Between CPI and PCE Inflation
Rent and Healthcare go different ways in 2026. Plus there are huge timing issues.
February 2, 2026: The Fed Has Two Huge Problems Starting Now, Acyclical Inflation and Jobs
The Fed is not in a good spot.
March 11, 2026: Year-Over-Year CPI Inflation Will Worsen for at Least Three Months
This is an easy forecast. And it does not even include gasoline prices.
March 12, 2026: Tame CPI Still Spells Trouble for Fed’s Favored Inflation Measure
A Bloomberg article comments on something I have been discussing for months.
I was definitely spot on regarding the divergence forecast (see above link).
Regardless, the Fed is in a tough spot, as predicted, given its strong preference for PCE vs the CPI as a measure of inflation.
We are stuck in a forever Fiscal Dominance nightmare.
Does anyone get vibes from 2007? Oil shock, talk about interest rate hikes due to oil induced inflation(bubkus), credit issues, high flying stock market while they ignore all the bad news. The real story is people are fleeing to DXY for security, stocks do not reflect reality and are way above the mean, credit issues are hidden and not mark to market. People are watching interest rate rise and think it is about inflation while it is about foreigner having to sell treasuries to buy oil. Think about all the underlieing problems that no one is talking about. Banks lending to NDF’s, Commerial Real Estate, Multi Family Real Estate(ie rent falling), Yen carry trade, consumer defaults, job loss, falling home sales, the biggest companies in the world exhausting their free cash flow and borrowing money to fund something with little to no revenue and finally banks with upside down bonds in held to maturity assets.
The proper response is to stabilize N-gDp. That means easing monetary policy. The US dare not enter a recession for fear of exploding fiscal deficits.
That means driving the banks out of the savings business, ala the 1966 Interest Rate Adjustment Act (which increases the supply of loanable funds thereby lowering interest rates). This action does not reduce the size of the payment’s system. It makes it more profitable.
See: “Profit or Loss From Time Deposit Banking”, Banking and Monetary Studies, Comptroller of the Currency, United States Treasury Department, Irwin, 1963, pp. 369-386
I have been wondering about the effect of the gulf states not buying treasuries with their petrodollars that are in short supply at the moment and soon in high demand to rebuild their bombed out cities.
Now that Trump has unleashed the potentially largest negative supply shock in economic history, he wants the Fed to add monetary oil to the building inflationary fire. Maybe Warsh will come to the sudden realization that he wants to “spend more time with his family.”
He’s trying to fix it by removing oil sanctions on Russia.
Silly pig.
now that he managed to ignore 5 decades of “don’t eff up Hormuz” he returns to a subject he “knows”–interest rates
all in the service of a “Greater Trump”
‘No other President can do the shit I’m doing’
True – nobody else was that retarded.
If the global economy collapses the Fed has three tools:
Of course there is always default and a re-set of the currency and chaos…
No debt in a country’s own currency is defaulted on. See #2 above, economics double speak for inflation.
we sure seem to be having a lot of emergencies with Trump.
Meanwhile, he, his family and their cronies are all good fabulously wealthy.
We’ll see how long it lasts – the DNC will bring lawfare against him again if they wind up back in power next year. At this point I wouldn’t be sad to see that entire crony capitalist bunch get taken to the cleaners. They caused a lot of misery in a short time.
They’ll be swept into power, and do Jack Shit, as they always have.
Another thing you have to take into account is the ONE TRILLION $$$ that the US pays in interest each year on it’s debt is like a stealth stimulus or stealth QE. So cutting rates “may” help borrowers but it would hamper savers..the net-net is probably zero. The biggest benefit of cutting rates goes to leveraged equity grifters who see a massive increase in faux net-worth.
Your President, ladies and gentlemen:
“Watch what happens to these deranged scumbags today,” Trump said.
“They’ve been killing innocent people all over the world for 47 years, and now I, as the 47th President of the United States of America, am killing them. What a great honor it is to do so! Thank you for your attention to this matter,” Trump wrote.
The Pedophile Mafioso is honored to kill school girls, just like the one he may have killed under Epstein’s attentive watch.
What a time to be alive to able to see this bedlam.
Trump’s one and only concern is literally the Dow Jones Industrials and 50,000…that’s it…period. And if rate cuts are what is needed to get there, then rate cuts it shall be. Will he get them?…no one knows.
One thing I do know, is once the US announces an exit of the this armada from the ME, the DJIA will soar 2,000 points in a matter of minutes. However, by then the economic malaise that follows will be baked in the cake and a full recovery will be more like a 12-24 month slog.
Bottomline, he blew everything on Israel and now it’s gone. Democrats are fully activated, Independents are pissed, and while MAGAtards are mostly still on board the Trump Train, even they are asking some questions as they receive their deployment notices in their emails.
Midterms for the GOP — bloodbath.
Maybe. i know a lot of republicans who may hate every policy of this administration but still wont vote for a dem. You also have extreme gerrymandering. Prob some “voter fraud” cough cough issues.
It won’t even matter anymore. Doctor to patient: Let me give you the bad news first. You are dying. The good news is that the new medication is 10 percentt lower. 😳
One hundred percent.
If you believe that the END IS NEAR.
The powers that be can an will keep the world economy from imploding just like they have the last several years.
Commercial real estate.
Retail malls….
Private equity
Limping along as if the GFC was a poor person problem, because it was…….
If closing this horny-muze shipping channel does not up end the global economy, then whoop dee do.
Bow down to our overlords.
I’m happy someone is benefitting from the calamity.
If the powers that be decide to crash the global economy Ala GFC?
Zirp is a forgone conclusion?
What else are THEY to do?
Changing Rates won’t solve the unfolding crisis …
Considering the debt,hiking rates is criminal,unless you print a lot before,remember the covid.Bond market is already weak and under the water.
Inflation is not a problem (except for people!),it is wanted and necessary to kill the debt.
Remember whow Weimar ended……They had no way out.
This is preemptive strike.
Looking for the scape goat to blame.
He sees something ominous coming.
Jet fuel prices are crazy
Cutting rates will just provide businesses cheaper capital to pull forward AI investments, and layoff employees **faster** . A rate cut is a policy error, if the goal is to slow job losses in the near term.
Problem is the debt:if you lower the dollar you kill some debt.
The problem is fiscally irresponsible deficit spending.
And fiscally irresponsible revenue cuts.
This was true at the beginning.If the government cuts spending now,you probably fall into deflation,and the value of the debt explodes higher.
I think the follow-on effects of the blockage of the Strait of Hormuz will be apparent to the Fed within a few weeks. A deep global recession seems likely. The Fed will probably disregard the inflation this war is bringing about and cut rates somewhat. Maybe 3/4% by year’s end. Medium and long rates won’t drop, though.
Blokage is good for inflation:if Trump really wanted to stop the blockage he could.
Iran is toast,and the medias are lying about their remaining strenght.
Yeah, Trump doesn’t want to. Lol
Did you wonder why the war errupted this month?Probably not.Check the debt crisis market now,and see all these big financial companies unable to refund those investors who want to leave.This is real,not conspiracy despite what you try not to see.
So how does attacking Iran fix that?
War is economic growth,you produce weapons,amunition and make companies like Halliburton work,and when you are at war you can cut the rates down and print money because the country “is in trouble”.In the Us,inflation was getting too low,raising oil prices will push all the other prices up.
Remember WW2 how USA got out of great depression and industrialized the country,and enriched the country through war.USA was not the same after.
I don’t say it’s good,just saying the financial problems dictate everything.
During covid,western countries produced mountains of debt and money printing(which are related).But in fall 2019 right before,finance was sinking badly.
This enormous printing created big inflation,FED knew this would hapen.Inflation kills the debt.
The trick was to hide a big part of this inflation:for instance,you don’t count the real estate in the statistics.
The US grew after the 2nd Colonial War because the industrial park of the colonial metropolises were bombed to smithereens. Ever since they rebuilt their industries in the 60s, the US got into warring messianism around the world to make sure that no other country would industrialize to challenge their industries. Then came the financialization of the Usonian economy, so the warring machine turned its attention on those pesky countries which would shun the dollar in their foreign trade, especially in the oil trade.
Every country would have used his power to do the same.I,like you don’t like it.but this is the way it works.if you are strong you rule.
It’s not messianism,it’s more like finance industry getting off the rails and taking charge of everything for its own profit.
Why does it have to be war though? Couldn’t you achieve the same result with massive tax cuts and increased spending? Suppose you just sent a check for $10,000 to every American, wouldn’t that have a similar result without having to kill tens of thousands of innocent people and have gas prices rise into the stratosphere?
I agree,but the military industry is huge and powerful in the US,they get what they want.Like in most countries.
With this war they are going to sell huge quantities of patriot missiles in the rich mideastern countries.And the price of a patriot is huge.This is just an example.
Nope…this instead
“Purim in 2026 will be celebrated from sundown on March 2 to nightfall on March 3. This holiday commemorates the saving of the Jewish people from Haman’s plot to annihilate them, as recounted in the Book of Esther.”
And where did you find out that Iran is losing? Did you go over there? No you read it off the screen.
Iran is not China neither Russia.Islamic leaders kept the the country poor and not very well developped.Population is mostly against their leaders,because the country is poor even with oil fields..
They soon won’t have any missiles boats and energy plants left.
Just look at what the US army did to invade Irak…it ended with very dirty bombs.
Same with the end of the war with Japan in the 40s.
I don’t say all this is good,i’m just trying to understand the way things are working
Do you know how many they had to begin with? How many were destroyed?
No, you don’t. So you don’t know how many they have, so your statement is not supportable.
They had many,now they have less,now they are unable to build more.Do you think they build them in their private basement?
Trump is our very own black swan event. This oil price surge will exacerbate the oncoming recession resulting in panicked deleveraging as all that fake Fed money goes poof.
A swan who’s voted in is not a black one. A swan that everyone sees is coming is not a black one, that is, unless you’re MAGA!
What make Trump a black swan is that he’s objectively insane. No one voted for that, or for bombing school girls, or for his endless and shifting delusional comments about the origins and conduct of the Iran war. Maybe I should clarify: his impulsivity and obvious dementia is the black swan.
While taco almost always chickens out as he has continued to do recently, beating up on the fed to lower short-term interest rates is the one issue that he has proved consistent.
I have noticed that he often does this right before he TACOs
The Fed should hike rates therefore they won’t.
Rates are more concerned by lowering the debt than fighting inflation.
Rates won’t lower the debt, just the percentage of government spending used to pay the debt. Lowering rates will give Trump room to increase military spending and continue growing the debt.
If you lower your rates,it doesnt send the dollar up,it means you need less money to borrow dollars,so the dollar has less value.If dollar has less value,the debt has less value.
The 10 year bond cares nothing for overnight lending rates.
Biggest part of the bonds are short term.Lower short term rates,sell many and with the money buy long term bonds to lower the 10 year when needed.This is what they do.