Late last month, Federal Reserve officials said they were quite ready to keep interest rates static amid an increasingly volatile domestic policy environment and given that inflation’s decline had slowed. “Participants indicated that, provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments,” minutes from the Federal Open Market Committee’s Jan. 28-29 meeting showed. Officials held the Fed’s benchmark policy rate in a range of 4.25%-4.5% at that gathering. The new minutes however don’t just underscore the cautious approach of Fed policymakers. When taken with all of the bad inflation news that’s come out since that meeting, they arguably make interest rate cuts anytime soon much less likely. Still, traders found other reasons to buy on Wednesday: Here’s your markets wrap. —David E. Rovella

What You Need to Know Today

The European Union’s top diplomat touted joint bonds as an option to rebuild the bloc’s military might in the face of Russian aggression, Donald Trump’s U-turn on 80 years of US foreign policy and fears NATO can no longer rely on Americans. Kaja Kallas, speaking to Bloomberg in Cape Town, South Africa, ahead of a Group of 20 meeting, said the EU is discussing how to increase defense spending, with topics such as joint financing increasingly part of the conversation. Kallas said the bloc could also look at redirecting unused money from a Covid pandemic recovery fund, at least for now. “This is short-term funding where we need to really find how we can use the leverage and really act fast,” Kallas said, adding that common bonds also were on the table. “But it’s also the mid-term and the long-term funding that we need to look into.”

Kaja Kallas, vice president of the European Commission  Photographer: Dwayne Senior/Bloomberg

Trump’s historic project to eviscerate the federal government—from terminating thousands of employees and experts to summarily firing agency heads and inspectors general in violation of federal law to assuming legislative branch powers—hasn’t triggered anything resembling an outcry from his fellow Republicans. But on Wednesday, Trump’s bid to end Russia’s war on Ukraine (seemingly on Kremlin terms) and meet with Vladimir Putin, along with a stream of falsehoods about who caused the war, caused some in his party to push back. “Russia is the aggressor, there’s no question about that,” Senate Majority Leader John Thune said, as other GOP members also chimed in. Trump “can speak for himself, but in my view there is no question who started the war.” For his part, Putin said of his American counterpart that “we haven’t seen each other for a long time,” but that he was ready to meet. He also referred to Trump as “Donald.” Overnight in Ukraine, Putin’s forces launched a massive drone strike on the port city of Odessa, leaving 160,000 without power or heat amid below-freezing temperatures.

The oil market is becoming increasingly numb to all of the noise coming out of Washington. Trump spent his first weeks in office railing against OPEC, while now he’s talking about a Kremlin deal on Ukraine. All the while, he’s been threatening tariffs against everyone from Colombia to Canada, Mexico, Europe and China (to be fair, the China tariffs actually happened). These proposed targets include some of the main crude suppliers to the US. But with no reason to know whether the 78-year-old Republican’s threats will ever materialize, or are simply an attempt at bargaining, the industry has been left to guess. So rather than causing price swings, the futures market is simply flat-lining. A gauge of implied volatility for benchmark Brent futures fell to its lowest level since July this week. “The oil market is showing signs of disorientation in the face of the sheer volume of new policy stances,” Standard Chartered analysts wrote this week. “Faced with so much information and the realization that a single social media post could move the market significantly in either direction at any time, many traders have responded by reducing their risk exposure.”

The US House of Representatives has drafted a budget plan that would order up $4.5 trillion in tax cuts. But the Republican majority’s blueprint only plans to pay for half of it—and then by slashing safety net programs such as Medicaid, Democrats warn. The rest would be paid for by increasing the debt ceiling by another $4 trillion (the US national debt is currently around $36 trillion—some $9 trillion more than America’s gross domestic product). The GOP-controlled Senate meanwhile has been working on a two-track strategy that put off the massive tax cuts until later. But on Wednesday, the whole process got scrambled when Trump weighed in. 

Time to call a cab. Uber and Lyft risk a decline in demand if rideshare prices continue to increase beyond current levels. This according to a new report showing the median price of an Uber and Lyft ride in the US rose 7.2% year-over-year in 2024. More than 72% of consumers said in a separate survey that they would “reduce or stop using rideshare services if prices increased further.” All that money the companies have been raking in however hasn’t translated to an equivalent raise for rideshare drivers—even as they put in more hours. 

What You’ll Need to Know Tomorrow

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