We are in the same camp as Federal Reserve Bank of Minneapolis President Neel Kashkari. On March 6, he said, "If we have a run rate that's very attractive, people have jobs, businesses are doing well, inflation is coming back down, why do anything?" We wrote an op-ed in the March 25 Financial Times titled, "The Fed should resist messing with success." We asked: "If the economy is doing well with the current level of interest rates, why lower them?"
Today, the stock market sank in the afternoon after Kashkari said, "If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all."
But why did the stock market drop so sharply after he essentially reiterated his position (chart)? Investors might be finally discounting the possibility of a no-show rate cut this year. Traders might have concluded that a strong employment report tomorrow might cause more Fed officials to turn more hawkish.
And then there is the price of a barrel of Brent crude oil: It rose above $90 today (chart). According to Israeli media, Israeli diplomats serving abroad have expressed their concern that their embassies will be the target of Iranian retaliation following Monday's alleged Israeli strike on Syria, which killed senior Iranian Islamic Revolution Guard Corps (IRGC) member Mohammad Reza Zahedi.
