US: Energy shock complicates Fed path – Commerzbank

Commerzbank’s Bernd Weidensteiner notes that U.S. inflation jumped to 3.3% in March, driven mainly by higher gasoline prices linked to the war in Iran, while core inflation remains moderate. The bank expects headline inflation to approach 4% by May before easing in the second half of 2026, with the Federal Reserve likely keeping interest rates unchanged until late 2026.

Energy shock lifts prices and risks

"U.S. inflation jumped to 3.3% in March, up from 2.4% in February. The main reason is the rise in gasoline prices due to the war in Iran."

"Excluding energy and food (the “core rate”), price pressure was actually slightly lower than expected at 0.2% month-on-month in March."

"For other goods and services, the energy price shock will not become apparent until the coming months."

"We expect the overall inflation rate to rise to nearly 4% by May."

"Assuming that the situation in the Middle East then eases and the oil price falls back to $80, inflation should ease again in the second half of the year, but not fall below 3% until spring 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)