Thursday: Fed Holds with 'Hawkish' Dissenters

The Federal Open Market Committee left the federal funds rate unchanged in its 3.5‑3.75 % target range, but three regional presidents dissented over the absence of an easing bias, prompting analysts to label the statement as hawkish. Markets reacted with modest equity declines and a 5.4‑basis‑point rise in the 10‑year Treasury yield. At the same time, crude oil spiked to $118 a barrel after former President Donald Trump urged a prolonged blockade of the Strait of Hormuz, adding geopolitical risk to the pricing outlook.

Australia’s Reserve Bank is poised to lift its cash rate by 25 basis points next week despite a softer‑than‑expected trimmed‑mean core inflation reading of 0.8 % for the March quarter. Headline CPI held at 4.1 %, driven largely by sharp increases in fuel (up 33 %) and electricity costs following rebate roll‑offs. ANZ economist Maddie Dunk highlighted that the RBA’s primary concern is medium‑term inflation expectations, aiming to avoid a price‑wage spiral. The central bank’s stance reflects confidence that the current tightening cycle will anchor expectations without further rate hikes.

New Zealand’s household cost index rose only 2.1 % year‑on‑year, well below the 3.1 % headline CPI, because the index includes mortgage interest payments that have fallen as borrowers refinance. Meanwhile, the Bank of Thailand left its policy rate unchanged at 1 % amid supply‑side inflation pressures from higher fuel prices and heightened Middle East uncertainty. Both central banks emphasized monitoring medium‑term inflation expectations, with the BOT expecting inflation to drift above its 3 % target temporarily before easing to 1.5 % next year. These cautious stances illustrate global policymakers’ focus on anchoring expectations while navigating volatile energy markets.