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PRIMER: Today's Fedspeak - Daly, Waller; FOMC minutes

Today's discussions from Fed officials, particularly from Daly and Waller, highlight a cautious yet vigilant stance regarding inflation amid geopolitical tensions.

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Iran demands fees for ships passing Hormuz during ceasefire, FT reports; Iran will demand that shipping companies pay tolls in cryptocurrency for laden oil Tankers passing through the Strait of Hormuz

Russia's Ust-Luga has resumed oil exports after two-week suspension, according to Reuters citing sources

PRIMER: Today's Fedspeak - Daly, Waller; FOMC minutes

US President Trump says may be joint US-Iran venture for Hormuz tolls, ABC reports

US President Trump says US will work closely with Iran, which have determined has gone through what will be a very productive regime change!; will be no enrichment of uranium; We are, and will be, talking tariff and sanctions relief with Iran

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  • 18:05BST/13:05EDT: Fed’s Daly (2027 voter, dove) will speak on the outlook for policy and the economy. Speaking in mid-March, Daly said there is no single most-likely path for rates; if the Iran conflict does not resolve quickly, the Fed may not be able to look through higher oil prices, as a prolonged war could raise inflation risks while weakening the labour market. She added that policy is in a good place, and the Fed must remain flexible.
  • 19:00BST/14:00EDT: FOMC March meeting minutes. The FOMC left rates unchanged at 3.50-3.75%, with no change to forward guidance, balance sheet plans or implementation guidance. Miran was the sole dissenter, favouring a 25bps rate cut. The statement was little changed, though it now says unemployment has been “little changed in recent months” and adds that developments in the Middle East pose uncertain implications for the US economy. The updated projections were modestly hawkish: growth forecasts were raised across 2026-2028, inflation projections were also revised higher, most notably for 2026, while the unemployment forecast for 2026 was unchanged at 4.4%, with only a slight upward revision for 2027. The median rates path was unchanged through 2028, though the longer-run fed funds estimate edged up to 3.1%. Powell’s press conference came across as hawkish despite the unchanged median dots. He stressed that persistent inflation, not weak growth, remained the main concern, highlighting sticky non-housing services, the need for more goods disinflation and upside risks from tariffs, oil and the Middle East. He said rate cuts would require renewed progress on inflation, while also noting that a rate rise was discussed, although most officials did not see it as the base case. Since the meeting, policymakers have generally endorsed the hawkish hold, with most favouring keeping rates steady until inflation shows clearer progress. Cuts remain possible only if the labour market weakens, but the bar is higher after the oil and war shock. Hikes are not the base case, though several officials say they cannot be ruled out if inflation worsens. Policymakers generally see a baseline of resilient growth, moderating inflation and only gradual labour market softening, but uncertainty has risen sharply. Officials have repeatedly stressed the “fog” around the outlook and a more difficult growth-inflation trade-off, though they have said policy is well placed to wait for clearer evidence before moving. On the Middle East conflict, officials noted possible two-sided shocks: it can lift inflation through energy and supply chains while also weighing on growth, sentiment and jobs. Policymakers have said that any short-lived shock could be looked through, but a prolonged conflict would likely delay cuts and raise the risk of a more hawkish response. Meanwhile, inflation is still seen as too high and as the main policy risk. Most say there is no clear evidence yet of second-round effects or a wage-price spiral, and expectations remain broadly anchored, but many have warned that persistent oil or supply shocks could bleed into core inflation and expectations, complicating policy.
  • 19:35BST/14:35EDT: Fed’s Waller (voter, dove) will give a speech at Bemidji State University. Speaking in mid-March, Governor Waller said he is cautious about the inflation impact of higher oil prices from the Iran war, but a weak labour market could still justify rate cuts later this year. He said caution is warranted for now, though if conditions evolve reasonably well and the labour market stays weak, he would again support cutting rates later in the year.
Context

Daly's emphasis on the flexible approach to policy indicates that the Fed is closely monitoring the implications of the Iran conflict on oil prices and inflation, while Waller reflects a willingness to consider rate cuts if labor market conditions decline. These insights suggest that, despite holding rates steady, the Fed is prepared to adapt its strategy based on evolving economic indicators, creating a complex environment for both rates and market sentiment.

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