From one side, we had the Producer Price Index (PPI) coming in WAY above expectations.
From the other, we had the Federal Reserve deciding on interest rates.
And somewhere in between… we have Donald Trump trying to push oil prices down… to prevent inflation from getting out of control.
INFLATION
Let’s start with the first and most important topic: inflation, and specifically the Producer Price Index (PPI).
So what is it?
In very simple terms, it’s the inflation that businesses see. The producers.
Before price increases reach us, the consumers, they first pass through them.
So if PPI is rising, it’s very likely we’ll see increases in supermarkets, electricity, basically everywhere.
It’s essentially an early warning signal.
Now let’s look at the numbers, because this is where it gets interesting.
PPI for February came in at +0.7% month-over-month, while analysts expected +0.3%. Almost double.
On a yearly basis, it reached 3.4%, the highest level in recent months.
Core PPI, which excludes food and energy, also came in above expectations.
In other words? Inflation isn’t over.
And if we dig a bit deeper, we can see why.
Services keep rising, food prices are pushing higher, and of course… energy.
And this is where we need to focus.
Because oil is arguably the most important cost in the entire economy.
From transportation to production and logistics, everything runs through it.
So if oil goes up, everything goes up.
TRUMP & OIL
And this is exactly where Trump enters the picture.
Seeing prices rise, especially due to the conflict with Iran and the issues in the Strait of Hormuz, he basically said: “I need to do something.”
What he did was grant a 60-day waiver to an old law, the Jones Act.
What does that mean in practice?
It allows more international ships to transport oil between U.S. ports.
That increases flexibility in the market, boosts supply, and in theory, puts downward pressure on prices.
Now, does it solve the problem? No.
Because the problem is global.
We have war, supply disruptions, and a key maritime route that is essentially constrained.
So yes, it helps, but it’s more of a temporary measure.
FED & INTEREST RATES
And all of this brings us to the Federal Reserve.
The Fed met yesterday and decided to keep interest rates unchanged, at 3.5% to 3.75%.
That was expected.
What’s interesting is what they said about the future.
If we look at the dot plot, meaning the projections of the central bankers themselves, we now see fewer expected rate cuts than before.
Just a few weeks ago, the market was pricing in two or even three cuts this year.
Now? Maybe one.
And that likely toward the end of the year.
Why? Because inflation isn’t falling as expected.
In fact, the Fed raised its inflation forecast to 2.7%, while still expecting the economy to grow at around 2.4%.
And this creates the big dilemma.
On one hand, we have persistent inflation.
On the other, an economy that hasn’t collapsed, so there’s no urgent reason to rush into rate cuts.
And on top of all that, we have the energy shock from the conflict, making things even more complicated.
It’s no coincidence that many economists are calling this a “nightmare for central bankers.”
And of course, markets have already started adjusting.
The probability of a rate cut in June has dropped sharply, same for July and September.
Now the conversation has shifted toward the end of the year… and whether it will even happen.
