USA & Canada Intelligence Brief — March 18, 2026

1 FOMC decides TODAY at 2pm ET — dot plot is the event of the year; hold at 3.50-3.75%; first Summary of Economic Projections incorporating oil shock; Powell’s second-to-last press conference before May 15 exit; rate cuts priced out for 2026; nonfarm payrolls fell 92,000 in February

The Federal Open Market Committee concludes its two-day meeting today with the rate decision at 2pm ET and Powell’s press conference at 2:30pm. The hold at 3.50-3.75% is certain — the dot plot is the event. This is the first SEP to incorporate the oil shock, and the projections will show where the committee expects rates, inflation, and growth through 2028.

The January meeting saw two dissenters — Governors Miran and Waller — who preferred a 25bp cut. The February jobs report shocked with a loss of 92,000 nonfarm payrolls and unemployment rising to 4.4%. Core PCE stands at 3.1%, headline CPI at 2.4%, and PPI printed 2.9% year-on-year as expected but underscored sticky wholesale prices.

Markets have priced out all 2026 rate cuts. Fed funds futures now see only one cut in December at the earliest, with some pricing extending into 2027 or 2028 despite the imminent arrival of Kevin Warsh, whom Trump nominated ostensibly for a willingness to cut. Goldman Sachs pushed its first cut forecast to September. Morgan Stanley still expects cuts once Warsh takes over.

Bank of America warned that with an April cut “almost entirely priced out, Powell’s ability to guide markets depends on the extent to which they perceive his comments as representing the committee’s consensus rather than his own views.” This USA Canada intelligence brief leads with the FOMC because the dot plot will define the rate architecture for North America and the world for the rest of 2026. This is part of The Rio Times’ daily intelligence coverage of the United States and Canada for the Latin American financial community.

2 Bank of Canada holds at 2.25% — Macklem warns he “will not let energy effects become persistent inflation”; CPI fell to 1.8%; unemployment rose to 6.7%; Q4 job gains “largely reversed”; CUSMA July review looms; markets now price one hike by December

The Bank of Canada held its overnight rate at 2.25% on Wednesday, as expected, but Governor Tiff Macklem delivered the most hawkish guidance since the easing cycle ended. He warned the Governing Council “will not let their effects broaden and become persistent inflation” if energy prices remain elevated.

Canada’s CPI eased further to 1.8% in February, down from 2.3% in January, with core measures now close to 2%. But the BoC noted that gasoline prices are already rising and “will push up total inflation in the coming months.” The labour market remains soft — employment gains from late 2025 were “largely reversed” in the first two months of 2026, and unemployment rose to 6.7%.

The statement acknowledged it is “too early to assess the impact of the conflict in the Middle East on growth in Canada.” The CUSMA review, with a July deadline, is the other major risk. Oxford Economics warned that CUSMA being torn up would send Canada into recession, requiring another half-point of cuts, while a resolution that lowers tariffs would allow a rate increase.

Markets now price roughly 40 basis points of hikes for 2026 following today’s decision. Capital Economics called this “unlikely given that core inflation should be back near 2% by mid-year,” but BNN Bloomberg’s Jason Daw said a hike is “more likely than a cut.” The Canadian dollar weakened 0.20% to C$1.3717 after the announcement. As covered in yesterday’s USA & Canada Intelligence Brief, Canada’s monetary policy is now hostage to two external events: the oil shock and CUSMA.

3 Federal judge quashed DOJ subpoenas against Powell on March 13 — called them “thinly veiled pretext” to coerce rate cuts; Pirro appealing; Sen. Tillis blocking Warsh confirmation until probe ends; Powell may stay as governor past May 15; most serious challenge to Fed independence since the 1930s

US District Judge James Boasberg issued a 45-page ruling on March 13 quashing grand jury subpoenas against Fed Chair Powell, finding “abundant evidence” that their “dominant purpose is to harass and pressure Powell either to yield to the president or to resign.” The judge said prosecutors offered “not a scintilla of evidence” of criminal intent.

US Attorney Jeanine Pirro immediately announced she would appeal, calling the ruling “outrageous.” The investigation nominally concerns a multi-billion-dollar renovation of the Fed’s headquarters, but Powell characterised it in a January video statement as “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”

Republican Senator Thom Tillis has vowed to block Kevin Warsh’s confirmation on the Banking Committee until the probe ends, creating a bipartisan alliance with Democrats including Elizabeth Warren. This deadlock means Powell may remain as chair past May 15 — or step down as chair but stay on the Board of Governors, where his term runs until early 2028, denying Trump an appointment.

Analysts described the crisis as the most serious challenge to Federal Reserve independence since the 1930s. The ruling has introduced a “Powell Premium” in equity markets, as traders now expect the more predictable Powell to remain at the helm longer than assumed. Today’s press conference at 2:30pm will be closely watched for any signal about Powell’s plans — Schwab’s analysts noted “don’t expect much from the Fed meeting but expect Powell will be asked about whether he’s likely to stay on as governor.”

4 Nvidia GTC opens — Huang projects $1 trillion hardware revenue through 2027; Vera Rubin chips debut later this year; JPMorgan maintains overweight; Warsh’s “AI-first economics” thesis bets the US economy on disinflationary AI productivity gains

Nvidia CEO Jensen Huang opened the GPU Technology Conference Monday evening projecting that revenue from Nvidia hardware could total $1 trillion through 2027 — implying $50-70 billion more revenue than Wall Street consensus for 2026-2027. JPMorgan maintained its overweight rating. Nvidia also unveiled the Vera Rubin chips expected to debut later this year.

Nvidia shares barely moved on the announcement, up less than 1%, suggesting the market has already priced in the AI capex cycle. The GTC comes at a moment when Kevin Warsh’s nomination has introduced what analysts call “AI-first economics” — the thesis that AI productivity gains are structurally disinflationary and justify lower rates despite a robust economy.

The tension between AI as a deflationary force and oil as an inflationary force is now the central debate in US monetary policy. If AI productivity gains are real, Warsh’s framework justifies aggressive easing. If they are overstated, the US faces 1970s-style stagflation compounded by high energy prices and a massive fiscal deficit.

Lululemon reports earnings today amid a proxy battle as founder Chip Wilson seeks board changes. The broader tech narrative — with Nvidia, Microsoft, and the AI infrastructure build-out — remains the one sector where capital expenditure growth is accelerating even as the oil shock compresses margins elsewhere in the US economy.

5 US gasoline hits $3.79/gallon — highest since October 2023; PPI 2.9% YoY confirms sticky wholesale prices; Wall Street opens lower; S&P/TSX down 0.9%; fiscal deficit $1.004 trillion in 5 months; Treasury yields inch lower ahead of FOMC

US gasoline prices rose to a nationwide average of $3.79 per gallon on Tuesday — the highest since October 2023, according to AAA. The price is up 7 cents in a single day and reflects the Hormuz closure’s pass-through to American consumers. WTI crude traded around $95.30, off early lows of $91.45.

February’s PPI printed 2.9% year-on-year, in line with expectations but underscoring that wholesale price pressures remain sticky even before the full oil shock hits the data. Treasury yields inched lower ahead of the FOMC — the 2-year at 3.665%, the 10-year at 4.206%, and the 30-year at 4.855%.

Wall Street’s main indexes opened lower Wednesday after the PPI data. The Dow fell 79 points at the open, the S&P 500 dropped 19 points, and the Nasdaq shed 58 points. In Canada, the S&P/TSX composite opened down 0.9% at 32,626 as oil-related costs pressured the broader market even as energy producers benefited.

The US federal deficit reached $1.004 trillion in the first five months of fiscal year 2026, adding to concerns about fiscal sustainability at a moment when Treasury is issuing at elevated yields. Morgan Stanley’s Global Director of Research noted the Hormuz closure “is turning a shipping disruption into a true global supply loss as storage in the region fills and upstream shut-ins rise.” The fiscal and energy pressures are converging to create the most challenging domestic economic environment since the pandemic.

FED The FOMC decision at 2pm ET today is the single most consequential US monetary policy event of 2026. The hold is certain. The dot plot is everything. If the median dot eliminates all 2026 cuts, the higher-for-longer regime becomes explicit and every asset class reprices. If it shows one or two cuts remaining, relief follows. Powell must navigate a treacherous final stretch — characterising the oil shock without committing to a path that his successor may immediately reverse. Bank of America’s observation that markets may discount Powell’s views as personal rather than consensus captures the lame-duck problem. This is a chair who has been subpoenaed, investigated, and whose replacement is stuck in the Senate. His credibility is paradoxically highest with markets and lowest with the administration.

CANADA Macklem’s warning that he “will not let energy effects become persistent inflation” is the most hawkish statement from the BoC since the easing cycle ended. The language is deliberate — it opens the door to hikes if the oil shock lingers. Canada’s predicament is unique among G7 economies: it is both an energy producer that benefits from high oil prices and a consumer economy where gasoline costs erode household purchasing power. The CUSMA review deadline in July is the other sword of Damocles. Oxford Economics’ warning that tearing up CUSMA would cause a deep recession explains why Macklem is keeping all options open — including the unprecedented possibility of cutting and hiking in the same year depending on which external shock dominates.

INSTITUTION The Powell-DOJ confrontation is the most serious challenge to Federal Reserve independence in modern history. Judge Boasberg’s language — “abundant evidence” of harassment, “not a scintilla” of criminal evidence — is extraordinary judicial rebuke of a sitting Justice Department. Pirro’s appeal ensures the legal battle continues. Tillis blocking Warsh creates a scenario where the chair position could be vacant or contested through the summer. The “Powell Premium” that analysts describe — markets preferring a predictable lame duck over an aggressive newcomer — tells you Wall Street values institutional stability over dovish promises. Gold above $5,000 is partly an “institutional insurance” trade against the possibility that Fed independence erodes further.

TECH Nvidia’s $1 trillion hardware revenue projection through 2027 is the counternarrative to the stagflation story. If Huang is right and AI capex continues to accelerate, the technology sector provides the deflationary offset that Warsh’s “AI-first economics” thesis depends on. If he is wrong, the US has the worst of both worlds — an inflationary oil shock and overbuilt AI capacity. JPMorgan maintaining overweight on Nvidia tells you the institutional view still favours the AI growth story. But the fact that shares barely moved on a $1 trillion revenue projection suggests the market has already priced the upside — and is now pricing the risks.

CONSUMER Gasoline at $3.79 per gallon — the highest since October 2023 — is the number that matters for US midterm elections. Every 10-cent increase in gas prices costs the average American household roughly $120 per year. The PPI at 2.9% confirms that wholesale prices remain sticky. The deficit at $1.004 trillion in five months means fiscal space to cushion consumers is limited. The nonfarm payrolls loss of 92,000 in February means the labour market cannot absorb the energy cost shock through wage gains. The convergence of high gas prices, a weakening job market, and a trillion-dollar deficit is the domestic economic pressure that the FOMC must acknowledge today — even if the dot plot pretends the path forward is clear.

1 FOMC dot plot and SEP — 2pm ET today — the projections will show revised GDP growth (previously 2.3% for 2026), core PCE (previously 2.5%), and the median rate path; if the median dot shows zero cuts for 2026, it confirms the higher-for-longer regime; if one or two remain, markets rally; Powell’s characterisation at 2:30pm adds the narrative layer.

2 Powell succession timeline — May 15 and beyond — with Tillis blocking Warsh and the DOJ appealing the subpoena ruling, the chair transition could be delayed or contested; Powell could stay as governor denying Trump an appointment; the April 28-29 FOMC would be Powell’s last meeting as chair if the May 15 timeline holds; confirmation hearings for Warsh remain unscheduled.

3 CUSMA review — July deadline approaching — the July joint review is Canada’s most consequential trade event since NAFTA was renegotiated; Oxford Economics scenarios range from tariff reduction (rate hike) to CUSMA termination (deep recession and rate cuts); Trump’s threat of 100% tariffs if Carney pursues China trade adds an unpredictable variable.

4 US gasoline price trajectory — midterm political risk — at $3.79/gallon and rising, gas prices are approaching the threshold that historically shifts voter sentiment; the national average crossed $4.00 in March 2022 during the Russia-Ukraine crisis and contributed to Democratic losses in the midterms; Trump faces the same dynamic ahead of November 2026.

5 Nvidia GTC and AI capex cycle — deflationary thesis under test — Huang’s $1 trillion hardware revenue projection through 2027 is the anchor of the Warsh “AI-first economics” framework; if AI delivers the productivity gains, rates can fall faster; if it does not, the US faces a capex overhang in technology layered on top of an inflationary energy shock — the worst possible combination for corporate margins.

6 US fiscal deficit — $1.004 trillion in 5 months — the deficit pace limits Washington’s ability to cushion consumers or fund infrastructure; Treasury issuance at elevated yields compounds the cost; the 30-year auction that tailed 12bp last week signals weakening demand for long-dated US government debt at current prices.

Jerome Powell — the Fed Chair delivers his second-to-last press conference today under extraordinary circumstances — subpoenaed, investigated, and with his replacement blocked in the Senate; Judge Boasberg’s ruling that the probe was a “thinly veiled pretext” has given him legal cover but not political certainty; markets will watch for signals about whether he plans to stay as governor past May 15, which would deny Trump an appointment and extend the “Powell Premium.”

Tiff Macklem — the Bank of Canada Governor delivered his most hawkish guidance since the easing cycle ended, warning he “will not let energy effects become persistent inflation”; his acknowledgement that “economic weakness combined with rising inflation is a dilemma” captures the stagflationary tension every central banker faces; the CUSMA review and oil shock are both external events beyond his control, leaving him to calibrate policy against two moving targets simultaneously.

Kevin Warsh — Trump’s nominee for Fed Chair remains blocked in the Senate Banking Committee by Tillis’s hold; his “AI-first economics” thesis — that AI productivity gains are structurally disinflationary and justify lower rates — has introduced an ideological dimension to the succession that goes beyond the usual hawk-dove spectrum; if confirmed, Morgan Stanley expects rate cuts as soon as June; his confirmation hearings remain unscheduled.

Jensen Huang — the Nvidia CEO’s $1 trillion hardware revenue projection through 2027 at GTC is the corporate anchor for the AI capex cycle; his Vera Rubin chip announcement and inference demand outlook provide the productivity thesis that Warsh’s monetary framework depends on; whether Huang’s projections materialise will determine whether the AI-first approach is visionary or reckless.

Thom Tillis — the Republican Senator from North Carolina has emerged as the pivotal figure in the Fed succession by vowing to block Warsh’s confirmation until the DOJ probe ends; his alliance with Democrats including Elizabeth Warren creates a bipartisan obstruction that the White House cannot easily overcome; the deadlock he has created may keep Powell in the chair position months longer than planned, fundamentally altering the rate trajectory.

1 Fed subpoena ruling — DOJ appealing, Pirro calls ruling “outrageous” — Judge Boasberg’s March 13 decision quashing the subpoenas found “abundant evidence” of political motivation; the appeal keeps the legal battle alive through the summer; the ruling’s precedent-setting language about executive interference in monetary policy may define the boundaries of Fed independence for decades.

2 CUSMA joint review — July 2026 deadline — the review determines whether the CUSMA tariff exemption that has protected Canadian exports survives; Trump’s threat of 100% tariffs on Canadian goods if PM Carney pursues China trade adds political conditionality; the BoC’s rate path depends almost entirely on the review’s outcome.

3 Section 301 probes — public comments April 15, remedies by July — the USTR investigations targeting 16 economies including the EU give the administration an alternative tariff pathway after the Supreme Court struck down IEEPA-based tariffs; Treasury Secretary Bessent said tariffs would return to “pre-ruling levels by August”; the probes intersect with the CUSMA timeline, creating simultaneous trade pressure on North America’s largest trading relationships.

4 Warsh confirmation process — stalled indefinitely — the nomination was submitted to the Senate on March 4 but Tillis’s Banking Committee hold prevents scheduling confirmation hearings; Warsh’s Estee Lauder family connections triggered an Office of Government Ethics review; his “AI-first” framework and plans for aggressive MBS portfolio liquidation would reshape monetary policy but cannot be implemented until confirmed.

At 2pm ET today, the Federal Reserve will tell the world what the oil shock means for American monetary policy. The hold is certain. The dot plot is everything. If the median dot eliminates all 2026 cuts, higher-for-longer becomes the explicit framework and every asset class from equities to emerging market currencies reprices accordingly.

Powell delivers this verdict under circumstances no Fed chair has faced since the 1930s. He has been subpoenaed, investigated, and a federal judge found “abundant evidence” the probe’s purpose was to coerce rate cuts. His replacement is blocked in the Senate. He may stay as governor past May, denying Trump an appointment. The “Powell Premium” in markets reflects a simple truth: Wall Street prefers institutional stability over political promises.

The Bank of Canada’s hold and hawkish guidance today confirms that North America’s two central banks are now in the same position — frozen between an inflationary oil shock and a weakening economy, unable to cut because of energy prices and unwilling to hike because of growth fears. Macklem’s warning that he “will not let energy effects become persistent inflation” opens the door to hikes if the crisis extends. The CUSMA July review adds a second external variable that is entirely beyond monetary policy’s reach.

Gasoline at $3.79 per gallon is the number that bridges the gap between the FOMC meeting room and the American kitchen table. Every cent higher erodes consumer confidence and adds to the political pressure that has already produced an unprecedented assault on Fed independence. The deficit at $1.004 trillion in five months means fiscal relief for consumers is limited. The nonfarm loss of 92,000 jobs in February means the labour market cannot absorb the energy cost shock.

Nvidia’s $1 trillion hardware revenue projection is the counterargument to the stagflation narrative. If AI delivers the productivity gains that Jensen Huang projects and Kevin Warsh’s framework assumes, the technology sector provides a structural deflationary offset to the oil shock. If it does not, the US has overbuilt AI capacity while underestimating inflationary persistence — the worst possible combination.

The Powell-DOJ confrontation will outlast today’s meeting. Pirro is appealing. Tillis is blocking. The legal battle may reach the Supreme Court just as the leadership transition is supposed to occur. For markets, this creates a “regime uncertainty” that no dot plot can resolve — not just about rates, but about whether the institution setting rates will remain independent of the executive branch.

Canada’s position captures the North American dilemma in miniature. An energy producer that benefits from $95 oil but whose consumers suffer at the pump. An economy whose exports depend on CUSMA but whose prime minister is being threatened with 100% tariffs. A central bank whose governor says he will not let inflation persist but whose data shows unemployment rising and jobs being reversed. There is no clean path through these contradictions — only a series of calculated pauses while the external shocks resolve.

For Latin American investors watching North America, today’s FOMC decision shapes the dollar trajectory, the rate differential, and the capital flow environment for the rest of 2026. A hawkish dot plot strengthens the dollar and tightens financial conditions across the hemisphere. A dovish surprise weakens it and provides breathing room. The Bank of Canada’s hold confirms that commodity-linked currencies face the same dilemma as the economies they represent — caught between the windfall of high prices and the damage those prices inflict.

By 3pm ET today, the architecture will be set. Powell will have spoken. The dot plot will be public. The market will know whether 2026 is a year of patience or a year of reckoning. What it will not know is whether the man who delivered today’s verdict will still be running the institution in June.

That uncertainty — about rates, about leadership, about the independence of the institution itself — is the defining feature of American monetary policy in 2026, as The Rio Times has tracked throughout this crisis. No dot plot can resolve it. Only the political and legal processes that Judge Boasberg, Senator Tillis, and Attorney General Pirro are now contesting can determine whether the Federal Reserve emerges from this crisis with its independence intact or diminished. Today’s meeting is the penultimate chapter. May 15 is the deadline. The epilogue has not yet been written.