US rates – who decides?

19 Mar 2025 2 min read

Daily update

  • Yesterday, US President Trump sought to fire the two Democrat commissioners on the Federal Trade Commission. If successful, this might become a precedent that could challenge the political independence of the Federal Reserve. If the president can dismiss Fed members, only the Senate confirmation process will serve as a check on politicization. Markets may not view that as robust. A political Federal Reserve risks weakening the US dollar’s reserve status.
  • For now, the Fed is independent, and is expected to leave rates unchanged today. Fed forecasts are also due, but the erratic policy climate creates considerable uncertainty about the economic outlook. On tariffs alone there is uncertainty about the breadth and scale of taxes, second-round effects, consumer reactions, and retaliation.
  • Eurozone final February consumer price inflation is a non-event as the numbers almost never change. There are a few ECB speakers scheduled, with markets firm in their expectation of additional rate cuts. The Bank of Japan left rates unchanged and highlighted trade risks to the outlook—hardly surprising.
  • Trump failed to get a comprehensive ceasefire in Ukraine, in a call with Russian President Putin. Europe seems to have limited faith in the direction of the negotiations, with the UK and the EU talking about accelerating arms shipments to Ukraine.
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