Inflation is a Complicated Issue

The big story mid-week was the release of the Fed’s March meeting minutes — essentially the behind-the-scenes notes from their last gathering. Most officials still expect to cut interest rates at least once before the end of 2026, but they’re in no rush. The ongoing conflict in the Middle East has pushed oil prices higher, which could reignite inflation — the very thing the Fed has been working so hard to bring down. Job growth has slowed, and the economy only expanded 0.7% in Q4 of last year. The Fed’s word of the week was “nimble” — their way of saying they’re keeping all options open and aren’t locked into anything. Some major Wall Street firms, including Wells Fargo, have dropped their rate cut forecasts for 2026 entirely. The bottom line: the Fed wants to cut, it just needs the data to give it the green light.

Thursday brought two notable stories. Regulators unveiled new draft rules that could free up as much as $320 billion in capital held by the nation’s biggest banks — money that could flow into loans, dividends, and stock buybacks. Think of it as loosening the leash on the banks a bit while still keeping them on it. Even after this change, they’d still hold roughly twice the capital they had before the 2008 financial crisis. Separately, the Fed’s preferred inflation gauge — the PCE index — came in at 3.0% year-over-year for February, right in line with expectations. Prices are cooling, but slowly. The last mile of the inflation fight is always the hardest, and we’re still in it.

We capped the week this morning with the March CPI report — and it was a big one. Headline inflation jumped to 3.3% year-over-year, up sharply from 2.4% in February, with prices rising 0.9% in a single month — the largest monthly increase since June 2022. The culprit was almost entirely energy. Gasoline prices surged 21.2% in March alone, the largest single-month jump on record, as supply concerns tied to the Middle East conflict rippled through the pump. The silver lining: core inflation — which strips out food and energy to show the underlying trend — came in at a more modest 2.6% year-over-year and rose just 0.2% for the month, suggesting that outside of energy, price pressures remain relatively contained. The key question now is whether this is a short-term spike that fades as the situation stabilizes, or the start of a broader inflation re-acceleration. Either way, this report makes it very hard for the Fed to cut rates anytime soon.

Interesting to Note

Tax Day is April 15th — just around the corner. Every year, billions of dollars move across the country as refunds go out and payments come in. Those refunds tend to give a quiet little boost to consumer spending in April and May. It’s a good reminder that millions of individual financial decisions, made all at once, actually move the economic needle.

Looking Ahead

• Fed Meeting (April 28–29): With today’s CPI print fresh in hand, all eyes turn to whether the Fed shifts its tone at the next meeting.
• Q1 Earnings Season: Major banks report next week. Their outlook on lending, consumer health, and capital plans will set the tone for the season.
• March PCE (April 26): The Fed’s preferred inflation gauge for March will be the next critical reading — and the first PCE to fully reflect rising energy costs.
• Energy & Middle East: Oil prices remain the key wildcard. A durable ceasefire would take real pressure off inflation — and off the Fed.

As always, our focus remains on your long-term plan — not the week-to-week noise. Have a great weekend!

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