Latest Finance-Economy News
Bank of Canada Faces War and Trade Uncertainty Ahead of Interest Rate Decision
The Bank of Canada will decide on interest rates this week while balancing fresh inflation data from Statistics Canada and geopolitical uncertainty from the Iran war. Financial markets currently place odds of a rate hold at around 92 percent, though weak February jobs data has marginally increased expectations for potential rate cuts
. BMO's chief economist projects February inflation could drop to 1.8 percent as a federal tax holiday falls out of the annual calculation
.
Federal Reserve Expected to Hold Rates Steady Amid Middle East Crisis
The Federal Reserve's policy committee is scheduled to meet March 17-18 and is widely expected to extend its pause on rate cuts despite tightening credit conditions. The statement is likely to flag the Middle East war as a threat to both inflation and employment, while the Strait of Hormuz closure threatens to disrupt supply chains and push prices higher
. Analysts now expect the Fed to hold off on rate cuts until September, with only two cuts anticipated before year-end
.
U.S. Employment Declined Sharply in February
U.S. nonfarm payrolls fell by 92,000 in February, and the unemployment rate rose to 4.4 percent. Job losses occurred across health care, manufacturing, construction, and transportation sectors, with a major health care strike and severe winter weather contributing to the decline
. Despite weaker hiring, wages increased more than expected at 0.4 percent monthly and 3.8 percent year-over-year
.
Oil Prices Surge as Middle East War Disrupts Supply
Brent oil prices surged to over $101 per barrel, the highest level since 2022, as producers in the Gulf region reduced or stopped production amid full storage and limited shipping options. Traffic in the Strait of Hormuz has largely halted following vessel attacks and Iran's installation of mines in shipping lanes
. Gas prices have jumped to $3.63 per gallon nationally, up from $2.94 a month ago
.
U.S. Economic Growth Significantly Downgraded for Fourth Quarter 2025
The U.S. economy expanded at only 0.7 percent annual rate from October through December, a major downgrade from the initial estimate of 1.4 percent. The downward revision reflects lower exports, consumer spending, government spending, and investment than initially estimated
. Last fall's 43-day government shutdown was a major factor in the loss of momentum, alongside sharp declines in consumption growth
.
Inflation Pressures Mount Amid Oil Price Shocks
Consumer prices rose 0.3 percent in February, bringing the annual inflation rate to 2.4 percent, with core inflation at 2.5 percent. The core PCE price index, which the Fed targets, rose to 3.1 percent year-over-year, marking the largest increase since March 2024
. Underlying inflation pressures were already rising before the Middle East war and are set to intensify as oil prices continue to impact gas and grocery prices
.
Mortgage Rates Rise as Investors Expect Sustained Inflation
Mortgage rates have been rising since the Middle East conflict began, likely because investors expect inflation will remain elevated. The U.S. housing market, already in a slump since 2022, faces additional headwinds from higher borrowing costs and reduced consumer purchasing power
. Housing starts showed some activity at 7.2 percent growth, but overall demand remains constrained
.
Consumer Sentiment Eroded by Iran Military Conflict
Interviews completed before the Iran military action showed improvement in sentiment, but lower readings from the nine days after military operations completely erased those initial gains. The Dow Jones has fallen for three consecutive weeks, possibly impacting wealthier U.S. households that have supported overall consumer spending as lower-income families pull back
. Consumer spending growth rose only 0.4 percent as economic uncertainty mounted
.
Consumer Debt Growth Slows Amid Economic Uncertainty
Consumer debt grew at a 1.9 percent annual rate in January, down from a revised 6.0 percent in December. Credit card balances rose 4.3 percent after jumping 11.3 percent the prior month, while non-revolving debt such as student and car loans advanced 1.1 percent
. The slowdown suggests consumers are becoming more cautious as economic headwinds intensify.
ISM Manufacturing Index Slips as Tariffs Reshape Industry
The ISM Purchasing Managers' Index fell to 52.4 in March, indicating a slowdown in manufacturing activity. Tariffs are reshaping the steel industry while demand for AI-related power infrastructure grows, and rare earth shortages are worsening
. These structural shifts are contributing to broader uncertainty in the manufacturing sector.
U.S. Economy Projected to Expand Modestly in 2026
The U.S. economy is projected to expand at 2 percent year-over-year in 2026 and 1.8 percent in 2027, with Q4-to-Q4 growth of 1.5 percent and 2.1 percent respectively. The Conference Board notes the U.S. continues to lead the global productivity race, though this advantage faces headwinds from trade uncertainties and geopolitical disruptions
. Growth projections reflect cautious optimism tempered by ongoing macroeconomic challenges.