Fed day and oil

Today at 2 pm the FOMC committee will publish its decision on rates. No change is expected. And no change is expected fo April either. There will be no meeting in May, where Kevin Warsh is supposed to be confirmed as chairman, and June will be his first FOMC. In the chart below you have the odds for rate cuts in June. Not looking too exciting. At the same time, there are reports that have calculated the impact on inflation if oil reaches $150/barrel and somehow stays there. CPI could reach 6% YOY, before it fades away over time. The Central Bank of Australia hiked yesterday, and other central banks are changing their bias towards hiking. The oil shock is the main reason. If it ends up being temporary, the world economy will absorb it and will move on. If it ends up being stickier than thought, we’ll see another inflation wave. It will affect other commodities, food, transportation, etc. The world still runs on oil, and because it’s not flowing as it used to, there are disruptions that haven’t kick in yet.

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