On this episode, Sarah Foster, U.S. economy reporter and analyst at Bankrate joins in, to break down the markets ahead of a key Federal Reserve policy meeting. Despite recent volatility, the markets are showing strength, but the big questions revolve around interest rates, inflation, and geopolitical risks, particularly the ongoing conflict in Iran. Sarah explains what to expect from Jerome Powell’s second-to-last press conference, the FOMC’s dot plot projections, and how these decisions could impact consumers and mortgage rates. Sarah also dives into oil price movements, explaining how rising West Texas and Brent crude prices affect both inflation and Americans at the pump. From market trends to real-world economic pressures, Sarah provides clear insights into what investors and everyday Americans should watch as Fed Day unfolds.
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Let's bring in our good friend Sarah Foster.
It is absolute anarchy down here today.
Sarah, US economy reporter and analyst at Bank Rs.
We'll talk until the bagpipes start to get very loud.
First off, look at all this beautiful green for St.
Patrick's Day across the board, despite the chop, despite the recent volatility.
What are you seeing, Sarah, as you look up at these markets today?
I know St.
Patrick's Day bump, you know, maybe here markets underpricing and political risk.
I don't know.
We'll see.
Everybody feels tomorrow, of course we've got a big Fed meeting that is expected to hold interest rates steady.
The big question now is whether the war in Iran is going to impact their plans to cut interest rates.
You know, here we go again is kind of what officials are saying.
5 years in a row now we've had something really interrupt that slow path to 2% inflation, and now it really seems to be like the Fed needs to stay on hold to see how things play out.
Absolutely.
So today is day one of the FOM.
Policy meetings, so we don't know any information yet.
We'll get Jerome Powell's, correct me if I'm wrong, 2nd to last press conference tomorrow.
We get the decision at 2.
We also get a dot plot analysis.
What are you going to be looking for for the summary of economic projections?
We get 4 of these a year.
They tell us a lot about the current thinking of the FOMC.
It's certainly going to be complicated here, you know.
The Fed, when they don't know what to do, they would err on the side of just preferring to stay put and not do anything.
Uh, it would take 3 officials to really shift the median at this point.
So, you know, we were looking at one rate cut in 2026.
We'll of course see whether that's still on the table.
Markets here for a while were actually pricing in higher odds of an interest rate hike this year than a cut, 41% probability that no cut happens at all in 2026.
You know, even in the bank rate data we're looking here, it's not really going to require. a Fed move for consumers to start seeing higher interest rates.
We've already seen mortgage rates edge up higher in the past 10 days as the conflict began.
And of course that's going to translate to even bigger affordability challenges for Americans.
Yes, of course, I want to get your take on oil and energy because you and I were talking before the show.
Kind of rare to have West Texas and Brent move up and have the rest of most of equities and stocks move up as well.
West Texas price at.
96 and change.
Brent, it's holding on at 103 a barrel.
What does that mean, not just for the Fed, but US consumers?
We know there is a translation to increases that we pay at the pump.
It's difficult, you know, when oil prices increase, when gasoline rises.
This is a supply side issue that the Fed typically would kind of judge as equaling itself out, you know, lower growth, but also higher inflation.
It's really the Fed doesn't have the patience to kind of wait this out anymore.
We're looking if retail gas prices increased from $3 to $4 nationwide because gasoline makes up about 3% of the overall CPI basket, that would translate to 1% point increase in inflation, which, you know, whether that impacts consumers' inflation expectations, of course after five years of really dealing with inflation higher than 2%. is the big question the Fed wants to answer.
Yeah, and I also want to get your take on what we're seeing out of mortgage rates because we tend to work in narratives and news cycles, and it's been a minute since we've really talked about the state of the 30-year fixed rate mortgage.
You've got some interesting data at a bank rate.
What have you been tracking?
Do you think the rest of us should be paying a little bit more attention to?
It really seemed like we were on the right path, you know, below 6% mortgage rates for the first time since 2020.
To that's of course a huge win for borrowers who've been stuck on the sidelines here.
That kind of has started to shift, you know, we still see that if you shop around on marketplaces and really compare options like those we have at Bank rate that you can find those good deals.
But the increases are really translating to higher costs for people who were to buy a home right now.
You know, some surveys suggest that the 30-year fixed may have crept all the way up from 6% to 6.4%.
For over the course of a year that would translate to $1000 extra in monthly payments.
So it's, it's, it's difficult right now and you know one where a lot of Americans are going to have to decide whether they want to time the market or wait it out.
Yes, of course, Sarah Foster, a very good friend of ours, thank you for being here as always to kick off taking stock in today's broadcast.
Sarah, US economy reporter and analyst at Bankrate.
Best of luck for Fed Day tomorrow as well.
We'll hear what Mr.
Powell has to say.