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The upcoming FOMC meeting will be closely watched as investors seek clarity on how the Fed plans to navigate the inflationary pressures of an energy shock from the Iran war, rising inflation hedge demand, and a weakening labor market—all challenges that will soon fall to incoming Fed Chair Kevin Warsh.

What caught our eyes this week

A tough job is getting tougher

The Federal Open Market Committee (FOMC) meets this week in what will likely be Federal Reserve Chair Jerome Powell’s penultimate meeting. No policy changes are expected, but investors will be watching closely for the FOMC’s thoughts on what the war in Iran means for the path of inflation and economic growth. More importantly, we will all be looking for hints as to what role the committee sees itself playing in the event of an energy-driven supply shock. Markets are pricing in a meaningful (but not catastrophic) near-term bump in inflation owing to elevated oil prices. Market pricing is rarely an accurate prediction, but the recent moves tell us that the demand for inflation hedges is rising. Accordingly, futures markets are starting to price out rate cuts for 2026 (the base case is now for one cut by year-end, but odds of no cuts are up to 39% from 3% a month ago). But longer-term inflation expectations still appear well anchored, which might allow the Fed to dust off the word “transitory.” And don’t forget, we just had a rough employment report for February. Safe to say Kevin Warsh will have his hands full when he takes the chair in June.

Graph showing Consumer Price Index swaps year-over-year inflation curves, with as-of dates of December 31, 2025, and March 12, 2026.

CHART OF THE WEEK: Cerity Partners, Bloomberg, 3/12/2026. Rate cut odds are from CME FedWatch as of 3/16/2026.

Past performance does not guarantee future results.

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