Track the evolution of major financial and economic events
On May 29, the Reserve Bank of New Zealand (RBNZ) surprised markets with a hawkish decision, raising the probability of a July rate hike to 79%. On the same day, expectations for a rate hike from the Reserve Bank of Australia (RBA) were scaled back due to softening economic data and rising unemployment. Additionally, optimism over a US-Iran deal led to a drop in oil prices and a dovish repricing of global rate expectations.
ECB data revealed that consumer inflation expectations in the Eurozone surged by 2.5 percentage points due to geopolitical shocks, including the Iran war driving up fertilizer prices. The OECD warns that the war could lead to recessions in some countries and sharply higher inflation. In the U.S., inflation rates have surged significantly, prompting companies to freeze hiring, while Americans are trying to adjust to a new phase of reduced spending power.
The independence of the Federal Reserve is under pressure due to Trump’s influence and the conflict with Iran. US Treasury yields have surged as Kevin Warsh takes the helm at the Federal Reserve. Modest cuts to the Fed's balance sheet are expected despite Warsh's ambitious reform agenda.
On May 26, ECB Chief Economist Philip Lane stated that the inflation outlook has worsened, reinforcing expectations for a rate hike in June.
Kevin Warsh officially began his tenure as Chair of the Federal Reserve on May 22 amid historic market volatility. Warsh emphasized the importance of institutional independence and the need to achieve price stability while maintaining economic growth. At the same time, consumer confidence hit record lows, raising concerns about housing security among the younger population. Additionally, inflation expectations rose to 3.9%, putting further pressure on monetary policy.
On May 13, Norges Bank raised its policy rate to 4.25 percent, according to Governor Ida Wolden Bache. This decision is part of the tightening monetary policy cycle being implemented by the bank.
The U.S. Senate confirmed Kevin Warsh's nomination to the Federal Reserve Board of Governors on May 12. He was also confirmed as Fed Chair in a party-line vote on May 13, signaling significant challenges ahead due to a Fed committee skeptical of the rate cuts demanded by President Trump. The vote was the most divisive in the history of Fed chair confirmations, and April's inflation spike leaves Warsh with no excuses not to raise rates.
On May 3, Bank of Greece governor Yannis Stournaras warned that concerns about the eurozone slipping into recession are real and justified. Stournaras noted that talks to end the conflict in the Middle East will be key for ECB monetary policy.
The Senate Banking Committee approved Kevin Warsh's nomination to lead the Federal Reserve in a 13-11 party-line vote. This nomination comes as Warsh faces external political pressures and energy shocks, while Jerome Powell warns that the central bank's independence is 'at risk.' The Federal Reserve is expected to start cutting interest rates next year, but inflation concerns remain high.
On April 23, the Bangko Sentral ng Pilipinas (BSP) initiated a new hiking cycle with a surprise 25bp rate increase. The central bank also revised its inflation forecasts higher due to rising oil prices and geopolitical risks.
U.S. Attorney Jeanine Pirro confirmed that the investigation into the Federal Reserve is ongoing despite legal challenges. The Department of Justice plans to appeal a judge's order that blocked subpoenas issued to Fed Chairman Jerome Powell. This probe is jeopardizing the confirmation of Kevin Warsh, President Trump's nominee to replace Jerome Powell.
On April 21, Fed chair nominee Kevin Warsh is scheduled to testify before the Senate Banking Committee. Warsh has previously indicated support for a range-based approach to inflation targets rather than a fixed point. He emphasized the importance of monetary policy independence and stated during his confirmation hearing that the Fed should 'stay in its lane.'
On April 16, 2026, the Federal Reserve released the minutes from its March 17-18, 2026 meeting, detailing discussions on monetary policy and inflation outlook. The minutes reveal members' views on current economic challenges and their impact on future policy decisions.
A legal dispute between the White House and the Federal Reserve has sparked market uncertainty regarding who takes command if the Chair's term expires without a confirmed successor. Current law does not explicitly state what happens when the Chair's term ends without a confirmed replacement in place.
On April 14, Singapore's central bank tightened monetary policy settings for the first time in over three years. This decision acts as a buffer against the economic fallout from the war in the Middle East.
Central banks face a policy dilemma due to oil shocks amid inflation fears. Policymakers are wary of repeating the mistake of waiting too long to raise rates as they did after the pandemic. There is a misconception among investors that the current oil shock will inevitably lead to policy tightening. However, there is a fundamental difference between demand-driven inflation and supply-side shocks. In another development, a cease-fire was reached between the U.S. and Iran, reflecting shifts in global financial markets.
On March 19, the Federal Reserve paused interest rate cuts, maintaining current levels. Fed Chair Jerome Powell adopted a notably somber and regretful tone during his remarks. On March 21, President Trump stated that he does not want to pursue a cease-fire, while hopes emerged on March 26 that the U.S. and Iran are negotiating a cease-fire.
Fed rate cut forecasts are under pressure due to oil price volatility and geopolitical risks. On March 18, the Fed decided to keep interest rates unchanged while projecting one cut in 2026. However, inflation concerns driven by war and rising oil prices are prompting shifts in monetary policy expectations. Global markets are entering a decisive 'Judgment Week' to assess the future path of interest rates.
On March 17, the Reserve Bank of Australia raised the cash rate target by 25 basis points to 4.10% amid ongoing inflation concerns. The RBA noted that capacity pressures contributed to rising inflation, warning that fuel-price shocks related to the Iran war could push inflation higher. Further rate hikes are expected in June and August, with peak interest rate forecasts revised to 4.85%.
Last week, significant decisions were made by central banks, with the FOMC meeting discussing interest rates, which were held at 3.5%-3.75%. Additionally, equity indices fell, with the Nifty 50 dropping 1.24% to 23,018.25. Meanwhile, oil prices surged above $110 due to the Iranian conflict, raising inflation concerns.
On March 13, 2026, U.S. Attorney for D.C. Jeanine Pirro held a press conference regarding a DOJ investigation into Federal Reserve Chair Jerome Powell. This investigation is part of a broader scrutiny of the financial policies and actions taken by Powell.
