This is an excerpt from our most recent Economic Outlook report. To access the full PDF, please click here.

The FOMC has a deepening conflict with its ‘dual mandate.’

They can cut policy rates to lift a tepid U.S. jobs market. Then, accept a ‘hot’ over 3.0% annual broad CPI rate, with the latest energy shock. Or raise the policy rate to slow inflation down.

Holding the Fed Funds rate flat should be the compromise, for now.

Secondary concerns: Commercial Real Estate Lending (with those prices currently down -7.01% y/y) remains a secular Fed concern, particularly on Office Lending.

Image Source: Zacks Investment Research

A following chart shows how the broad U.S. Consumer Price Inflation battle looks.

Zacks provides the U.S. 10-Year Breakeven Inflation Rate across the last 5 years.

Image Source: St Louis Federal Reserve

• A “sticky” CPI was noted, in advance of the Iran conflict oil shock. On April 3rd, 2026 a Breakeven U.S. Consumer Inflation Rate was 2.36%.
• An April 22nd, 2022 breakeven U.S. 10-year rate at 2.98% was the 20-year chart high. 
• With a April 3rd breakeven inflation rate at 2.36%, this is 36 basis points above the Fed’s +2.0% statutory mandate for expected core CPI (best thought of as core PCE). 
• Higher crude prices lift fuel costs and push up headline inflation. For households already facing cost-of-living pressures, this can be felt quickly. 
• For example, when the price of WTI oil goes up by $10 a barrel, the rough rule of thumb is that the price of gasoline for U.S. drivers could rise by about 25 cents a gallon. 
• According to Bloomberg and AAA, the daily average national gasoline price for regular unleaded went from $2.98 a gallon on Feb. 27th to $4.11 a gallon on April 4th, 2026.