Brent crude futures surged about 7% overnight to $114.86 per barrel, per CNBC. That's the number driving everything this morning.
What matters:
The Fed held rates at 3.50% to 3.75% and kept its dot plot median at one cut for 2026, but raised its core PCE inflation forecast to 2.7% from December's 2.5%.
The Dow dropped 768 points on Wednesday to hit a fresh 2026 low, closing below its 200-day moving average for the first time this year.
Powell said he'll stay on as "chairman pro tempore" past his May 15 term end until Kevin Warsh is confirmed, a process that's now stalled in the Senate.
That oil number is where the pain starts. Overnight, reports of fresh attacks on Middle Eastern oil infrastructure and continued disruption to tanker traffic through the Strait of Hormuz sent prices spiking, per Bloomberg. Indian markets are set for their biggest drop in a year, driven in part by the crude spike.
What the Fed actually said.
The rate hold was expected, passing 11-1, with Governor Stephen Miran dissenting in favor of a 25-basis-point cut. The dot plot was the focus, and at first glance it looked stable: the median still projects one 25-basis-point cut this year. But underneath the headline, the shift was hawkish. Seven of 19 officials now project zero cuts in 2026. The Fed also raised its core PCE inflation forecast to 2.7% from December's 2.5%, and nudged its longer-run rate estimate up to 3.1% from 3.0%.
Powell's press conference set the tone for the selloff. He said inflation progress has been slower than hoped. His exact framing, per CNBC: the Fed expects to make progress on inflation, "not as much as we had hoped, but some progress." He added that near-term inflation expectations have risen, "likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East."
Markets didn't take it well. The S&P 500 fell 1.36% to 6,624.70, per CNBC. The Nasdaq dropped 1.46%. The Dow lost 768 points, or 1.63%, closing at 46,225.15, a new low for the year.
The Powell wildcard nobody expected.
Powell announced he intends to remain as Fed chair past his May 15 term expiration until Warsh is confirmed by the Senate. He used the phrase "chairman pro tempore," per Axios. He also said he will not leave his Board of Governors seat until a DOJ investigation into him is "well and truly over."
That investigation has become a political flashpoint. Sen. Thom Tillis (R-NC) is blocking Warsh's confirmation hearing, per CNBC, arguing the DOJ probe of Powell appears to be a pretext to pressure him into lowering rates. So the Fed chair succession is now tangled in a Senate standoff, and Powell isn't going anywhere.
This morning.
U.S. futures are pointing slightly lower, with S&P 500 futures down about 0.2% and Nasdaq futures down about 0.3% in early trading, per CNBC. Oil is the dominant force. With Brent around $115, the stagflation math gets harder for every central bank, not just the Fed.
Worth bookmarking: The Fed released the full Summary of Economic Projections yesterday. If you want to see every dot and every forecast number for yourself, it's all there.
