I am fully expecting a key Fed hike unless there is extraordinary news, like collapsing prices. Market rates have risen globally due to higher energy prices and after the hike, more central banks are expected to follow and raise key interest rates. The big news is expected to be the that may signal whether or not the Fed is “one and done” or signal that more key interest rate hikes will be forthcoming. Under new Fed Chairman Warsh, the Fed may not provide good guidance, since Warsh wants Wall Street to take its cue from market rates.
Kevin Hassett, the Director of the National Economic Council, said that he and President Trump do not think there is any need for a Fed key interest rate hike. Hassett said, “Whatever they’re going to decide, we will 100% support them.” In Ireland, President Trump said, “I don’t know” when asked about the Federal Open Market Committee (FOMC) meeting. I suspect that Treasury Secretary Scott Bessent, who wanted Kevin Warsh to be Fed Chairman, will run interference and explain to President Trump that if the Fed does not hike key interest rates, it could weaken the U.S. dollar, especially after the European Central Bank (ECB) raised key interest rates last week.
Interestingly, The Wall Street Journal reported that Canadian Prime Minister Mark Carney is now seeking full membership in the European Union (EU) to resolve its trade spat with the U.S. This is clearly an act of desperation for Canada, and it would be interesting if the EU welcomes Prime Minister Carney’s overtures. Naturally, if the EU welcomes Canada to become an “associate member” of the EU, then Carney would adopt EU tariffs and ignore existing tariffs with the U.S.
Alberta is in the midst of a succession movement to become an independent country, and Saskatchewan could follow. The EU’s Net Zero goal by 2050 is devastating to Alberta and Saskatchewan, since fossil fuels and chemical fertilizers would be banned under the EU’s strict climate goals. So, an implosion of Canada might ensue if Brussels imposes its strict EU rules on Canada.