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close video The Fed risks ‘overshooting’ its inflation, rate hike goals: Diane Swonk

KPMG Chief Economist Diane Swonk says it’s important to remember rapid rate hikes can exacerbate market fragility.

A high-stakes inflation report due Wednesday is expected to show that price pressures within the economy remained strong last month despite an aggressive interest rate hike campaign by the Federal Reserve.

Economists expect the consumer price index, which measures a basket of goods, including gasoline, health care, groceries and rent, to show that monthly prices rose 0.2% in March, down slightly from an increase of 0.4% February. On an annual basis, inflation is projected to have climbed 5.1% at an annual rate, a decline from 6% the previous month and a peak of 9.1% in June. 

While that would mark the slowest pace of inflation since May 2021, it remains nearly three times higher than the Fed's 2% target. 

Other parts of the report are also expected to point to a slow retreat for inflation, a worrisome sign for the U.S. central bank. Core prices, which exclude the more volatile measurements of food and energy, are expected to climb 0.4% or 5.6% annually, suggesting that underlying price pressures remain strong. 

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"Core inflation, and core services, should remain sticky-high," Bank of America analysts wrote in a note Monday,

The report is the last before the Federal Reserve's next policy-setting meeting May 2-3 and will have major implications for the U.S. central bank, which is tightening monetary policy at the fastest rate in decades as it tries to crush out-of-control inflation. 

Officials have already approved nine straight rate increases, lifting the federal funds rate to a range of 4.75% to 5%, the highest since before the 2008 financial crisis. 

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Markets expect policymakers to approve another quarter-percentage point hike at the conclusion of their meeting next month despite upheaval in the banking system and concerns over a slowing economy. 

A man shops for meat at a Safeway grocery store in Annapolis, Md., May 16, 2022. (Jim Watson/AFP via Getty Images / Getty Images)

The probability that the Fed continues its rate hike campaign in May rose to 71% Wednesday, according to data from the CME Group's FedWatch tool, up from 44.8% just one week ago. About 28% of traders, meanwhile, are expecting central bankers to pause the rate hikes. 

"The Fed's policy should continue to have the desired impact on price pressures," said Michael Weisz, president of the investment firm Yieldstreet. "However, the target rate of 2% continues to be a long way off from the current path. The 'higher for longer' thesis may include both interest rates, as well as overall price levels, and thus slowing inflation may not happen as quickly as desired."

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Shoppers in a Kroger supermarket Oct. 14, 2022, in Atlanta. (Elijah Nouvelage/AFP via Getty Images / Getty Images)

The Fed is also watching other economic indicators, including job growth and consumer inflation expectations. In another welcoming sign for the central bank, there were indications the labor market softened but did not deteriorate last week. 

The March jobs report showed employers added 236,000 jobs last month, the smallest gain since December 2020, and that monthly wages also cooled. 

"Employment growth has not yet collapsed, though there are visible signs of continued moderation," said Kathy Bostjancic, Nationwide chief economist. "In all, the Federal Reserve will be pleased by the details of the employment report, but still is supportive of another rate hike in May, which we think could be the last for the tightening cycle, followed by a long pause."

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Entertainment

Olivier Awards: US actor says ‘special relationship firmly intact’ despite Trump’s tariffs

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Olivier Awards: US actor says 'special relationship firmly intact' despite Trump's tariffs

British star Lesley Manville and American actor John Lithgow have won the acting categories at this year’s Olivier Awards, which recognise excellence in London theatre.

Lithgow, 79, played Roald Dahl in Giant, which is about the children’s author wondering whether to make a public apology.

While accepting his award he appeared to reference the current controversy over Donald Trump’s second term as US president.

The Conclave star quipped: “It’s not always easy to welcome an American into your midst, and at this particular moment, it’s probably a little more complicated than usual.”

He also told the audience at the Royal Albert Hall that the “special relationship is still firmly intact”, despite Mr Trump imposing tariffs on British exports to the US.

His co-star, English actor Elliot Levey, took best actor in a supporting role.

Giant was also named best new play.

Lesley Manville was best actress. Pic: PA
Image:
Lesley Manville was best actress. Pic: PA

Manville, 69, was honoured for her performance in the Greek tragedy Oedipus at the Wyndham’s Theatre.

She said she felt “emotional” while accepting her statuette because it was a production she had “felt very strongly about being” in.

Manville, who played Princess Margaret in The Crown, added that she was taking an early flight to Dublin on Monday to do some filming, and would not be getting “much sleep tonight”.

Romola Garai was best actress in a supporting role. Pic: PA
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Romola Garai was best actress in a supporting role. Pic: PA

Best actress in a supporting role went to Romola Garai for her performance in The Years, based on a memoir by French writer Annie Ernaux.

Garai, whose film credits include Scoop and Atonement, was nominated in the same category for Giant.

Elliot Levey was best actor in a supporting role. Pic: PA
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Elliot Levey was best actor in a supporting role. Pic: PA

Dame Imelda Staunton won a fifth Olivier, for best actress in a musical for the London revival of classic musical Hello, Dolly!

The Curious Case Of Benjamin Button won best new musical, a best actor musical award for Lark Rise To Candleford actor John Dagleish, and the outstanding musical contribution award.

The annual event was co-hosted by British singer Beverley Knight and Pose star Billy Porter.

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UK

Suspended surgeon at Addenbrooke’s Hospital in Cambridge named

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Suspended surgeon at Addenbrooke's Hospital in Cambridge named

The suspended surgeon at Addenbrooke’s Hospital in Cambridge has been named as paediatric consultant Kuldeep Stohr.

Eight hundred patients operated on by Ms Stohr are having their cases urgently re-examined, after an external review found nine children whose care fell below expected standards.

The initial review was ordered after concerns were raised by her colleagues.

Sky News has seen a copy of the interim report which details several issues relating to complex hip surgeries performed by the surgeon.

One of the parents whose child was identified in the review showed us a recent letter from the hospital which reported “problems with both judgement and technique” in her child’s surgery.

Ms Stohr, who has been suspended since the end of January, said in a statement: “I always strive to provide the highest standards of care to all my patients.

“I am co-operating fully with the trust investigation and it would not be appropriate to comment further at this time.”

Tammy Harrison
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Tammy Harrison: ‘It was hell’

Left in agonising pain

Tammy Harrison, 12, has cerebral palsy and had surgeries carried out by Ms Stohr. Her operations didn’t work, leaving her in agonising pain.

She said: “My first one was just like trauma. I couldn’t get out of bed for eight weeks. I was either stuck in bed or stuck on the sofa. It was hell.”

Her mum, Lynn, told Sky News: “There is nothing that can put Tammy back to where she was now and that’s the sad thing.

“If I could just click my fingers and have the child back that I had I would do it with a blink of an eye.”

Lynn Harrison
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Ms Stohr operated on Lynn Harrison’s daughter

So far, there’s been no confirmation of any wrongdoing in Tammy’s care.

But her family have a meeting at the hospital this week to find out more.

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The trust has asked a panel of specialist clinicians to review all the planned operations carried out by Ms Stohr at Addenbrooke’s. One hundred emergency trauma cases will also be looked at.

Addenbrooke’s is a major regional trauma centre and treats serious emergency patients from all over the region.

One clinician at the hospital told Sky News that the review of so many patients was “creating a lot of extra work”, which was “slowing things down” for other patients awaiting treatment.

Addenbrooke's Hospital. File pic: PA
Image:
Addenbrooke’s Hospital. File pic: PA

At least one extra locum consultant has been helping the team, as they work through the caseload.

Trust apologises

Sky News has been told Cambridge University Hospitals Trust had wanted to identify Ms Stohr before but had been threatened with a legal injunction.

The trust has apologised unreservedly to families and patients. But what’s troubling many is the fact concerns were raised about Ms Stohr a decade ago.

Chief executive of Cambridge University Hospitals Trust, Roland Sinker, has set up another review to examine whether opportunities were missed, and action could have been taken sooner.

The Department of Health described the ongoing situation as “incredibly concerning.”

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Environment

U.S. crude oil falls below $60 a barrel to lowest since 2021 on tariff-fueled recession fears

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U.S. crude oil falls below  a barrel to lowest since 2021 on tariff-fueled recession fears

A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. 

Pavel Mikheyev | Reuters

U.S. oil prices dropped below $60 a barrel on Sunday on fears President Donald Trump’s global tariffs would push the U.S., and maybe the world, into a recession.

Futures tied to U.S. West Texas intermediate crude fell more than 3% to $59.74 on Sunday night. The move comes after back-to-back 6% declines last week. WTI is now at the lowest since April 2021.

Worries are mounting that tariffs could lead to higher prices for businesses, which could lead to a slowdown in economic activity that would ultimately hurt demand for oil.

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Oil futures, 5 years

The tariffs, which are set to take effect this week, “would likely push the U.S. and possibly global economy into recession this year,” according to JPMorgan. The firm on Thursday raised its odds of a recession this year to 60% following the tariff rollout, up from 40%.

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