The outlook just keeps getting more uncertain. Powell came to his first monetary policy testimony of the year last week with a plan to deliver a message, which he laid out very clearly early in the Q&A portion of the first day’s hearing. For the immediate period ahead, the FOMC’s intention is “to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment.” His signal that the FOMC would almost certainly lift off at its March meeting with a 25-basis-point hike (not 50, certainly not zero), lowered at least slightly the immediate stakes for Friday’s jobs report as well as the February CPI report coming out on Thursday. That, and a flurry of developments since then related to the Ukrainian war and associated geopolitical crisis relegated the remarkably strong jobs for February to a position of much less attention than would normally be the case.
Most notably, there was a further large increase in oil prices as prospects increased for a U.S. ban on oil imports from Russia, which President Biden did indeed announce today. The blackout on communications by FOMC participants is now in effect, so we won’t hear them comment on the most recent developments before the March meeting. But their pre-blackout comments established the lens through which they’re viewing geopolitical events.
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