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The U.S. Bureau of Labor Statistics will release the highly anticipated March inflation report on April 10, and the stock market is not prepared for the potential impact. The report is expected to show a significant jump in the trailing 12-month inflation rate, largely due to the historic energy supply disruption caused by the conflict between the U.S., Israel, and Iran. This could prompt the Federal Reserve to abandon its rate-easing cycle and consider raising interest rates, which would be a major blow to the currently overvalued stock market.
Why it matters
The March inflation report could have far-reaching implications for the Federal Reserve’s monetary policy and the trajectory of the stock market. If the data shows a substantial increase in inflation, the Fed may be forced to change course and consider raising interest rates, which would be a significant departure from the market’s expectations and could lead to a sharp decline in stock prices.
The details
Roughly six weeks ago, U.S. and Israeli military forces began attacks against Iran, leading Iran to close the Strait of Hormuz to virtually all oil exports. This has resulted in a 67% increase in the price of West Texas Intermediate crude oil since February 27, and a jump in the national average cost of a gallon of regular gas from less than $3 to $4.09 over the same timeline. The effects of the Iran war are directly hitting consumers at the fuel pump, with lower-income households spending a higher percentage of their budget on fuel.
- The March inflation report will be released on April 10, 2026 at 8:30 a.m. ET.
- The Federal Open Market Committee (FOMC) meeting is scheduled for April 28-29, 2026.
The players
Federal Reserve Bank of Cleveland
The Cleveland Fed’s Inflation Nowcasting tool has been forecasting a trailing 12-month inflation rate of 3.25%, up 85 basis points from the previous report, as of April 3, 2026.
Jerome Powell
The Chair of the Federal Reserve, who along with other members of the FOMC, may be forced to abandon the rate-easing cycle and consider rate hikes based on the March inflation report.
Donald Trump
The former U.S. president whose tariffs on imported goods have contributed to ongoing price stickiness, which could further impact the Federal Reserve’s monetary policy decisions.
What’s next
The Federal Open Market Committee (FOMC) will hold its next meeting on April 28-29, 2026, where it will likely make decisions on monetary policy based on the March inflation report.
The takeaway
The March inflation report could be a major turning point for the Federal Reserve’s monetary policy and the trajectory of the stock market. If the data shows a significant increase in inflation, the Fed may be forced to abandon its rate-easing cycle and consider raising interest rates, which would be a significant blow to the currently overvalued stock market.
