Powell: Don't Ask, I Simply Don't Know

The Federal Reserve wrapped up its meeting last night. One sentence summary: Holding steady, everything as expected, but Powell himself says forecasts should come "with a grain of salt."

Meeting Results
- Interest rates unchanged: 3.5%-3.75%, no surprise
- Dot plot: Median 3.4% (year-end), same as December last year → Still expecting 1 rate cut this year

The core signal from Powell's press conference this time is summed up in one word: uncertainty.
- "Inflation hasn't declined the way we hoped," "Rising oil prices are expected to push up inflation in the near term," "Take forecasts with a grain of salt, uncertainty is extremely high," Regarding tenure: will remain until successor Warsh officially takes office

This Middle East conflict is way beyond the Fed's scope. Powell himself admits economic forecasting is like flying blind — nobody has clairvoyant powers to know what war will bring. See chart.

JPMorgan responded at lightning speed with a very direct stance: The Fed is ignoring Middle East risks, and its optimistic expectations on inflation and employment may be misjudged. JPM's latest forecast: Zero rate cuts in 2026, possibly even a 25bp rate hike in Q3 2027.

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