Analyst Marte said this week's Fed meeting is Wash's first major credibility
test as Fed chair; investors, policymakers and the public are watching whether
he will defend the Fed's political independence. Trump has publicly urged
independence on rate-setting but continues to signal a preference for lower
borrowing costs. Some investors warn that if Wash fails to send a strong
inflation signal he risks losing control of the bond market. April CPI rose 4.2%
YoY, the fastest in over three years. Any impression the new chair intends to
alter the Fed's 2% inflation target could push yields higher and further
restrain the economy, running counter to Trump's objectives. A US–Iran peace
deal could ease some fuel-price pressure, but pass-through to consumers would
likely to be delayed.
