LONDON — Emergency support to help Brits grappling with rising bills should go to “those who need it most,” Chancellor Rachel Reeves said Tuesday — all-but ruling out a Liz Truss-style universal bailout in response to the Iran war. Pledging to “learn the mistakes of the past,” Reeves told MPs Tuesday that, while “contingency planning” is underway for “every eventuality,” the government will be “responsible” with public finances in any new state intervention. Oil and gas prices have soared since the conflict began, leading to higher fuel prices in the U.K. and sparking fears of a sharp increase in family and business energy bills when a regulated price cap period ends in July. Reeves said that, while the full impact of the crisis is not yet known, “the challenges may be significant.” In response to the 2022 energy crisis sparked by Russia’s invasion of Ukraine, the government of then-Prime Minister Liz Truss subsidized the bill of every household in the country — a policy backed by the Labour Party at the time. But Reeves today criticized the “unfunded, untargeted” 2022 package, saying it had pushed up borrowing, interest rates and inflation. Between 2022 and 2024, households in the top income decile received an average £1,350 of direct energy bill support, Reeves said, contributing to national debt “still being paid today.” However, the chancellor stopped short of explicitly ruling out a similar approach. She said: “Contingency planning is taking place for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our ironclad fiscal rules to keep inflation and interest rates as low as possible.” The government has already announced a £53 million package of support for households that use heating oil, which are not protected by the energy price cap. The majority of households that use gas and electricity will not see prices rise until July, when the next price cap period ends. The latest expert projections suggest the average annual bill could rise by more than £200 from current levels. On fuel pricing, Reeves said the government would give an update “within the next month,” amid pressure from opposition parties to extend a longstanding five pence tax relief on gasoline and diesel — the fuel duty cut — beyond its expiry date in September. U.K. gasoline prices have have risen by nearly 16 pence per liter since the war began, while diesel has risen by more than 31 pence.

LONDON — Keir Starmer’s keeping Britain out of the war in Iran — but he can’t duck the conflict’s grave economic consequences. In a sign of growing fears about the impact of the war on Britain, the prime minister chaired a rare meeting of the government’s emergency COBRA committee Monday night, joined by senior ministers and Governor of the Bank of England Andrew Bailey. Starmer’s top finance minister, Rachel Reeves, will update the House of Commons on the economic picture Tuesday, as an already-unpopular administration worries that chaos in the Middle East is shredding plans to lower the cost of living and get the British economy growing. For Starmer’s government — headed for potentially brutal local elections in May — the crisis in the Gulf risks a nightmare combination of a rise in energy prices, interest rates, inflation and the cost of government borrowing that threatens to undermine everything he’s done since winning office. Economists are now warning that even if Donald Trump’s promise of a “complete and total resolution of hostilities” with Iran were to bear fruit, the effects on the British economy could still last for months. Already there are signs of a split within Starmer’s party over how to respond. Labour MPs want the government to think seriously about action to protect households — but Starmer and Reeves have long talked up the need for fiscal responsibility, and economics are warning that there’s little room for maneuver. Fuel prices displayed at a Shell garage in Southam, Warwickshire on March 23, 2026. | Jacob King/PA Images via Getty Images Jim O’Neill, a former Treasury minister who served as an adviser to Reeves, told POLITICO the government should “not get sucked into reacting to every external shock” and “concentrate on boosting our underlying growth trend.” WHY THE UK IS SO HARD HIT Just before the outbreak of war, there was reason for Starmer and Reeves to feel quietly optimistic about the long-stagnant British economy. The Bank of England had expected inflation to fall back sustainably toward its two percent target for the first time in five years, giving the central bank the space to carry on cutting interest rates.  With the Iran war in full flow, it was forced to rewrite those forecasts at the Monetary Policy Committee’s meeting last week — and now sees inflation at around 3.5 percent by the summer. The U.K. is a big net importer of energy and also needs constant imports of foreign capital to fund its budget and current account deficits. That’s made it one of first targets in the financial markets’ crosshairs. The government’s cost of borrowing has risen by more than half a percentage point over the last month. That threatens both the real economy and Reeves’ painstakingly-negotiated budget arithmetic. Higher inflation means higher interest rates and a higher bill for servicing the government’s debt: fiscal watchdog the Office for Budget Responsibility estimates a one-point increase in inflation would add £7.3 billion to debt servicing costs in 2026-2027 alone. The effect on businesses and home owners is also likely to be chilling. Britain’s banks are already repricing their most popular mortgages, which are tied to the two-year gilt rate. Hundreds of mortgage products were pulled in a hurry after the MPC meeting last week, something that will hit the housing market and depress Reeves’ intake from both stamp duty and capital gains. Duncan Weldon, an economist and author, said: “Even if this were to stop tomorrow, the inflation numbers and growth numbers are going to look materially worse throughout 2026. “If this continues for longer… it’s an awful lot more challenging and you end up with a much tougher budget this autumn than the government would have been hoping to unveil.” DECISION TIME The U.K.’s economic plight presents an acute political headache for Starmer, as he faces a mismatch between his own party’s expectations about the government’s ability to help people and his own scarce resources. Energy Secretary Ed Miliband has promised to keep looking at different options for some form of assistance to bill-payers hit by an energy price shock. A pain point is looming in July, when a regulated cap on energy costs is due to expire and bills could jump significantly. One left-leaning Labour MP, granted anonymity to speak frankly, said: “They [ministers] need to be treating this like a financial crisis. They need plans for multiple scenarios with clear triggers for government support.” A second MP from the 2024 intake said “it’s right that a Labour government steps in, particularly to help the most vulnerable.” Foreign Secretary Yvette Cooper and Chancellor of the Exchequer Rachel Reeves at the first cabinet meeting of the new year at No. 10 Downing St. on Jan. 6, 2026 in London, England. | Pool photo by Richard Pohle via Getty Images This demand for action is being felt in the upper echelons of the party too, as Culture Secretary Lisa Nandy recently argued Reeves’ fiscal rules — seen as crucial in the Treasury to reassure the markets — may need to be reconsidered if prices continue to rise and a major support package is needed.  One Labour official said there are clear disagreements with Labour over how to go about drawing up help and warned “the fiscal approach is going to be a massive dividing line at any leadership election.” The same official pointed to recent comments by former Starmer deputy — and likely leadership contender — Angela Rayner about the OBR, with Rayner accusing the watchdog of ignoring the “social benefit” of government spending. Despite the pressure, ministers have so far restricted themselves to criticizing petrol retailers for alleged profiteering, and have been flirting with new powers for markets watchdog the Competition and Markets Authority. The government said Reeves would on Tuesday set out steps to “help protect working people from unfair price rises,” including a new “anti-profiteering framework” to “root out price gouging.” But Starmer signaled strongly in an appearance before a Commons committee Monday evening that he was not about to unveil any wide-ranging bailout package, telling MPs he was “acutely aware” of what it had cost when then-Prime Minister Liz Truss launched her own universal energy price guarantee in 2022.  O’Neill backed this approach, saying: “I don’t think they should do much… They can’t afford it anyhow. The nation can’t keep shielding people from external shocks.” Weldon predicted, however, that as the May elections approach and the energy cap deadline draws nearer, the pressure will prove too much and ministers could be forced to step in. The furlough scheme rolled out during the pandemic to project jobs and Truss’s 2022 intervention helped create “the expectation that the government should be helping households,” he said. “But it’s incredibly difficult. Britain’s growth has been blown off-course an awful lot in the last 15 years by these sorts of shocks.” Geoffrey Smith, Dan Bloom, Andrew McDonald and Sam Francis contributed to this report.

FRANKFURT — Europeans will feel the pain of the war on Iran in their wallets this year, even if things don’t get any worse from here on, the European Central Bank warned on Thursday. The ECB’s new forecasts show that inflation is set to rise to 2.6 percent this year—well above the 1.9 percent forecast as recently as December, while growth will slow as businesses and households have to divert more of their spending power to essentials such as energy. “The war in the Middle East has made the outlook significantly more uncertain, creating upside risks for inflation and downside risks for economic growth,” the ECB said, drawing on new quarterly forecasts for the eurozone outlook. The forecasts were published after its policy-making Governing Council left the Bank’s official interest rates unchanged, as expected. The renewed hit comes just as purchasing power was starting to recover from the last surge in prices caused by Russia’s invasion of Ukraine in 2022. That pushed headline inflation up to 10 percent within a year. On the upside, this forecast suggests that the ECB expects the problem to correct itself without it needing to raise interest rates aggressively. It sees inflation easing back towards the ECB’s 2 percent target within a couple of years, the time horizon that the ECB uses to guide its policy decisions. The economy is forecast to grow, albeit slightly less than previously expected: the Bank trimmed its forecast to 0.9 percent from 1.2 percent for this year, and to 1.3 percent from 1.4 percent for next year. Central banks are generally reluctant to respond to so-called supply shocks because their main policy tool — control over interest rates — only works with long and often uncertain time lags, while the geopolitical situation behind the supply shock can change at very short notice. However, they have to balance that against the risk of appearing complacent and letting expectations of high inflation become self-fulfilling, as constant price increases by retailers lead to more aggressive pay demands from workers. In its regular policy statement, the ECB stressed that it is “closely monitoring the situation” and will set monetary policy as appropriately. Investors have bet that this means raising the key deposit rate twice this year, to 2.5 percent. But policymakers around the globe have cautioned against rushing to such conclusions. “The thing I really want to emphasize is that nobody knows,” Federal Reserve Chair Jerome Powell told reporters following the Fed’s decision to leave rates unchanged on Wednesday. “It is too soon to know the scope and duration of the potential effects on the economy.”  ECB President Christine Lagarde is expected to echo that message at her press conference later on Thursday. However, the Bank did say that it had looked at the possible consequences of an extended disruption of global oil and gas supplies, and warned that this “would in the supply of oil and gas “would result in inflation being above, and growth being below, the baseline projections.” There is broad consensus among central bankers and private-sector economists that the longer the conflict lasts, the more likely it is to create so-called “stagflation” — a combination of economic stagnation and inflation. While the ECB, like other central banks around the world, was content to adopt a “wait-and-see” policy on Thursday, analysts don’t expect its patience to last very long. A clearer picture is expected to emerge as soon as next month. “If the current situation persists through to the April meeting, a hike becomes a distinct possibility,” according to ABN AMRO’s chief economist Nick Kounis.

The Bank of England warned it may have to take a tougher line on interest rates as the spike in energy prices caused by the U.S.-Israeli war on Iran pushes inflation higher. “Monetary policy cannot reverse this shock” to world energy supply, Governor Andrew Bailey said in a statement on Thursday, after the Monetary Policy Committee voted unanimously to leave the Bank rate unchanged at 3.75 percent. “Monetary policy must, however, respond to the risk of a more persistent effect on U.K. consumer price inflation,” Bailey added. The Bank had only last month declared victory over inflation, which has been above its 2 percent target for over four years. However, its latest analysis suggests headline inflation will rebound back above 3 percent in the next three months and could add as much as 0.75 percentage points to the consumer price index over the summer, as higher fuel bills percolate through the economy. “The MPC is alert to the increased risk of domestic inflationary pressures through second-round effects in wage and price-setting, the risk of which will be greater the longer higher energy prices persist,” the Bank stressed. However, it also acknowledged that the energy price spike is likely to hurt economic growth, and that it is “assessing the implications for inflation of the weakening in economic activity that is likely to result from higher energy costs.” Until the U.S. and Israel attacked Iran, most analysts had predicted that a slowing economy and growing prospects of easing inflation would allow the MPC to cut rates at Thursday’s meeting. However, the invasion and the ensuing turmoil in world commodity markets have turned the situation on its head, by closing a vital chokepoint at the mouth of the Persian Gulf, through which irreplaceable volumes of oil, gas and fertilizer pass every day. As a result, the Bank warned that there is now a real threat of higher energy prices causing a broader rise in prices across the economy. Food prices face a similar risk. ALREADY OUT OF DATE? The situation is changing so fast that the Bank’s latest forecasts could already be out of date. The Bank said they were based on the situation as of March 16, when Brent oil futures were only at $100 a barrel. But a succession of strikes on key energy installations around the Persian Gulf since then has already pushed prices up by another 12 percent. “The news flow around the war in Iran looks more worrying for global markets with each passing day,” Deutsche Bank strategist Jim Reid said in a note on Thursday. Analysts argued ahead of the meeting that the Bank would prefer to err on the side of keeping policy tight in the face of the new risks, given lingering concerns about its credibility due to its slow response to the inflation shock in 2022. Inflation peaked at 11.1 percent back then, the highest rate posted by any major economy. The Bank’s change in outlook will make life doubly uncomfortable for the Labour government, which had hoped that its efforts to close the U.K. budget deficit would be rewarded with lower inflation and lower interest rates. Instead, the government’s key 10-year borrowing costs have risen by nearly half a percentage point since the war started, and they leaped again on Thursday, first in response to Iranian attacks on a Qatari gas field, then to the BoE’s statement. At 4.89 percent, the 10-year gilt yield is now at its highest in 15 months. The pound, by contrast, was steady against the dollar and euro after the decision. The Office for Budget Responsibility earlier this month already cut its forecasts for U.K. growth this year. That implies lower tax receipts which, combined with higher borrowing costs, threaten a new two-way squeeze on Chancellor Rachel Reeves’ fiscal arithmetic, less than six months after she had to raise taxes sharply at her latest budget.

President Donald Trump is demanding that the Federal Reserve immediately lower borrowing costs. But the war in the Middle East has now made any interest rate cuts much less likely in 2026 — not just in the U.S. but around the world. With oil prices surging past $100 a barrel and Gulf shipping routes disrupted by Iran, governments and investors are bracing for a repeat of the 2022 energy shock from Russia’s invasion of Ukraine. And from Washington to Frankfurt, and London to Tokyo, the world’s central banks are likely to strike a more wary tone on inflation while assessing the fallout during a flurry of policy meetings taking place this week. The effective closure of the Strait of Hormuz, a channel through which roughly a fifth of global oil passes, is pushing up costs not only for energy and transportation, but also for other key goods that are shipped through the waterway. The result could be a toxic mix for central banks: higher prices and lower employment, two problems they’re not equipped to address simultaneously. “My best guess, but spoken with no conviction at all, is that this gets sorted out somehow in the next few weeks, and by the middle of the year, oil prices have come back down a fair amount,” said William English, a former top staffer at the Fed who is now a professor at Yale University. “But there’s a real risk, of course, that things go on for longer and are more damaging. And in that case, all bets are off.” The specter of a prolonged global energy crunch could dash the hopes of consumers, businesses and investors worldwide for rate cuts this year — and in some cases, throw those plans in reverse. No immediate moves are likely except in Australia, which raised its target rate by a quarter-point on Tuesday. But markets have already repriced their bets on what comes next from monetary policymakers. Indeed, if the Fed does cut rates later this year, it might be one of the few major central banks that does so, given that other economies like Europe are more exposed to higher energy costs than the U.S. Before the war, investors saw a chance of cuts from the Fed, the European Central Bank and the Bank of England. Now they’re pricing in an altogether tighter policy stance: at least one ECB rate hike this year, a 60 percent chance of a BoE increase, fewer and later cuts from the Fed and more urgency in raising rates from the Bank of Japan. Central bankers will prefer to wait until they get a better gauge of the economic repercussions from the conflict because “the shock could turn out to be negligible or very large,” said EFG chief economist Stefan Gerlach. But few doubt the need for strong messaging as central banks are wary of repeating 2022, when energy price shocks combined with the after-effects from Covid and fiscal stimulus to morph into the worst inflation spike in half a century. “There will be a significant contingent worrying about upside inflation risks in light of the 2022 experience,” J.P. Morgan economist Greg Fuzesi said ahead of the ECB’s policy-making council’s meeting on Thursday. The Iran conflict is further complicating efforts by Trump to demonstrate to voters that the GOP is addressing cost-of-living concerns before this year’s midterm elections. Already, the war has caused a surge in politically salient gas prices and erased some of the progress toward more affordable mortgage rates. And it’s further muddied the picture for a central bank that the president has been pressing hard to take decisive action toward rate cuts. Now, when Chair Jerome Powell and other Fed officials meet on Wednesday, they’re expected to be more open to the idea of rate increases later this year, though that’s still not the likeliest outcome. As Yale’s English pointed out, higher costs might ultimately increase the case for rate cuts if they slow the economy significantly. “With the higher oil prices and the shock to the global economy, the likelihood of overheating seems reduced now, so that’s one of the reasons you might be comfortable waiting through some period of higher inflation,” rather than hiking rates in response, English said. “This might be enough to push the economy into real weakness, and in that case, they might well have to cut.” But if households and businesses start to worry about a new acceleration in inflation and start expecting higher prices, that dynamic can be self-fulfilling and might call for rate hikes. Hawkish policymakers are already signaling the ECB won’t hesitate this time. “A reaction by the ECB is potentially closer than many people think,” Peter Kažimír, Slovakia’s central bank governor, told Bloomberg last week. “We will be ready to act if needed.” President Christine Lagarde pledged to ensure that consumers “don’t suffer the same inflation increases like those we saw in 2022 and 2023.” Back then, the ECB was slow to react, helping inflation surge past 10 percent. Economists say today’s backdrop looks very different: In 2022, rates were near or below zero, balance sheets were bloated and fiscal policy was highly expansionary. “When inflation rose, it did so in an environment of strong demand supported by both fiscal and monetary stimulus,” said Gerlach. Now, tighter monetary and fiscal policy should limit the risk of energy shocks spilling through the economy into second-round effects. Still, Barclays analyst Silvia Ardagna says that if medium-term inflation expectations “deteriorate significantly,” she expects “the ECB to act more swiftly than in 2022, but to tighten policy gradually.” Nick Kounis, of Dutch bank ABN AMRO, also sees a more hawkish tone. “Uncertainty on the conflict is high, but if the current situation persists through to the April meeting, a hike becomes a distinct possibility,” he said. Many analysts say the first obvious central bank casualty of the war is likely to be the Bank of England, which was widely expected to cut this week but is now seen firmly on hold. That’s because the U.K. still hasn’t quite gotten on top of the inflation that was unleashed four years ago. Andrew Benito, an economist with hedge fund Point72 in London, reckons that the inevitable increase in fuel prices and household energy bills alone will add a full percentage point to headline inflation by summer, with “second-round” impacts on other prices pushing it even further away from the BoE’s target. That, says Deutsche Bank’s Sanjay Raja, will force the bank into some “uncomfortable trade-offs”: The U.K. economy has already slowed over the last year due to global trade uncertainty and various government tax hikes to close the budget deficit. Hiking rates when the economy is already struggling could risk needlessly making things worse. But any sign of complacency could be disproportionately punished by the markets, given that the BoE performed worse than any other major central bank during the last inflation shock (the headline rate peaked at over 11 percent). Raja expects BoE Governor Andrew Bailey to highlight the differences with 2022 — when inflation was accelerating rather than slowing — as one reason not to overreact to today’s price spike. However, he expects that Bailey, like the ECB and others, will talk tough about not letting business and households develop an inflationary mindset again. More important will be the Bank of Japan’s decisions and press conference on Thursday, due to the outsized influence of Japanese interest rates on global financial markets. For decades, Japan kept interest rates low and printed money furiously to escape deflation. As long as it did so, Japanese and foreign investors borrowed yen cheaply to throw at higher-yielding markets such as the U.S. Now, however, the BoJ’s concerns have finally switched from deflation to inflation, and BoJ Governor Kazuo Ueda is now in a hurry to “normalize” policy. Its key interest rate, at 0.75 percent, is the lowest in the developed world outside Switzerland. But Japan, too, faces a big headwind from higher energy prices because of its dependence on imports, and Gregor Hirt, chief investment officer for Multi Asset at Allianz Global Investors, argues that the BoJ will hesitate before raising rates again. The trouble with waiting and seeing is that the yen has already lurched lower, prompting alarm in Washington and sparking rumors of possible intervention to support it. “In order to stop further weakness, the BoJ may have to move up a rate hike to stabilize the currency,” Hirt said. Meanwhile, the war has presented the Swiss National Bank, which has kept interest rates at zero since June 2025, with a different kind of conundrum. One risk is that a global “flight to safety” drives the Swiss franc to even greater heights against the euro and others. That could make so many imports cheaper that the overall inflation rate could turn negative. Alternatively, the boost in energy prices could have the same malign impact on inflation as it will elsewhere. “The SNB will probably prefer to wait and see which of the two effects will have the greater impact on inflation prospects before acting in one direction or the other,” said ING economist Charlotte de Montpellier, who expects the Swiss central bank to stay on hold. That response, shot through with varying degrees of nervousness, looks likely to be the dominant one this week. But things will look very different if the war situation hasn’t improved by the next round of meetings.

A federal judge has quashed the Justice Department’s criminal probe into Federal Reserve Chair Jerome Powell’s Senate testimony regarding the central bank’s headquarters renovation, writing that the grand jury subpoenas were a “mere pretext” to pressure the Fed. “There is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will,” Chief U.S. District Judge James Boasberg wrote. “The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President.” U.S. Attorney for D.C. Jeanine Pirro, whose office led the investigation, said in a press conference afterward that she would appeal the decision. She sharply criticized Boasberg, saying he “put himself at the entrance door to the grand jury, slamming that door shut, irrespective of the legal process, and thus preventing the grand jury from doing the work that it does.” “This process has been arbitrarily undermined by an activist judge,” she said. Pirro’s plan to appeal the decision could further delay the confirmation process of President Donald Trump’s pick to replace Powell, former Fed Gov. Kevin Warsh. Warsh’s nomination has been blocked by outgoing Sen. Thom Tillis until the investigation into Powell is resolved. The North Carolina Republican warned the administration on Friday afternoon against appealing the decision. “We all know how this is going to end, and the D.C. U.S. Attorney’s Office should save itself further embarrassment and move on,” Tillis posted on X. “Appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair.” The White House did not immediately respond to a request for comment. Trump has severely criticized Powell for more than a year for his reluctance to lower interest rates, with the president accusing him of holding back the economy. Powell has said the subpoenas were part of Trump’s pressure campaign to force him to cut borrowing costs. The investigation into Powell’s testimony on the status of a costly renovation of the central bank’s headquarters kicked off a firestorm that threatens Trump’s aims to stack the Fed board with appointees who share his views on lowering short-term borrowing costs. Powell’s term as chair expires in May, and Pirro’s vow to appeal the decision could prolong a legal clash that will keep the Fed’s future leadership up in the air. Tillis, who has vowed to block any Fed picks until the Powell probe is publicly dropped, sits on the Senate Banking Committee, which has jurisdiction over Fed nominations. Republicans have a 13-11 majority on the committee, meaning that Tillis’s vote is needed to advance any nominee to the Senate floor if every Banking Committee Democrat votes against them. In a hearing before the committee last June, the panel’s chair, Tim Scott (R-SC), asked Powell about the status of the Fed’s renovations after a New York Post article characterized them as akin to the “Palace of Versailles.” Powell told senators that “there’s no new marble. There are no special elevators. There are no new water features. There’s no beehives, and there’s no roof terrace gardens.” That caught the eye of Federal Housing Finance Agency Director Bill Pulte, who urged lawmakers to look into the matter, and the White House launched its own probe into the project last summer. Several Senate Banking Republicans — including Scott — have said they do not believe Powell committed a crime with his testimony. Sen. Cynthia Lummis (R-Wyo.), a Powell critic, said in a statement that the Fed chief “was wildly underprepared for his testimony, but, as I have said before, I’m not sure it rose to the criminal level.” Wall Street executives and top lawmakers have repeatedly cautioned Trump against actions that might undermine the central bank’s ability to independently set interest rates, which bolsters its credibility and is viewed as a stabilizing force for global markets. Trump has also tried to fire Fed Gov. Lisa Cook over unsubstantiated allegations of mortgage fraud — her fate will be determined by the Supreme Court — and the president has flirted numerous times with attempting to dismiss Powell. In January, Powell posted an extraordinary two-minute video to the central bank’s website claiming that the DOJ’s subpoenas represented a politically motivated attempt to pressure the central bank into lowering interest rates. The threat of criminal charges was 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,” he said. The move was unusual because Powell has steadfastly refused to respond to Trump’s blizzard of insults since he returned to the White House. The president has publicly questioned Powell’s intelligence and competence, and has said his monetary policy decisions are driven by politics. In her combative press conference, Pirro called the judge’s decision on Friday “outrageous.” She cited a Supreme Court precedent that grand juries can investigate mere rumors. And she dismissed suggestions that she should look skeptically at allegations that may be politically motivated. “I’ll take a case from the devil if you can give me information that will lead me to possibly find a crime,” she said. “It doesn’t matter where the case comes from.” While Pirro suggested it is exceptional for a judge to block a grand jury subpoena, federal court rules allow them to do so if they believe a subpoena is “unreasonable or oppressive.” In his ruling, issued Wednesday and unsealed on Friday, Boasberg noted that numerous court precedents authorize judges to quash a subpoena when its “sole or dominant” purpose is improper. Boasberg, an appointee of President Barack Obama, conceded that the subpoenas issued to the Fed were relevant to a criminal investigation. But he said their obvious connection to attempts to exert unlawful pressure on Powell and other members of the Fed’s Board of Governors rendered the subpoenas unenforceable. “The President spent years essentially asking if no one will rid him of this troublesome Fed Chair. He then suggested a specific line of investigation into him,” the judge wrote. “The President’s appointed prosecutor promptly complied.” Boasberg’s rejection of the subpoenas to the Fed is just the latest clash between the chief judge of the federal district court in the capital and the Trump administration. The judge’s earlier rulings in a dispute over Trump’s drive to rapidly deport alleged gang members under a two-century-old wartime authority led Trump to call for Boasberg’s impeachment. Some House members embarked on that effort last year, but it has not progressed. Pirro said that in addition to an appeal, which would go to the D.C. Circuit Court of Appeals, prosecutors intend to ask Boasberg to reconsider his ruling because it included some inaccurate dates. That could delay any appeal because judges typically cannot alter rulings while they are under appeal.

Russian President Vladimir Putin entered the new year facing a painful choice — limit his so-called special military operation in Ukraine or risk serious damage to his economy. Almost overnight, U.S. President Donald Trump handed him the solution. U.S.-Israeli strikes on Iran have sent oil prices soaring, boosting the Kremlin’s main source of revenue and making it easier for Putin to sustain his war effort. After Israel bombed Iranian oil facilities this weekend, benchmark crude prices soared to above $100 per barrel, hitting their highest mark since the summer of 2022, when markets spiked following Russia’s full-scale invasion of Ukraine. For Russia, the surge in oil prices amounts to an economic windfall at a crucial moment, as the cost of four years of war in Ukraine threatened to spill over into a domestic economic crisis. The assault on Iran may undermine Moscow’s claim to stand by its allies, but it is already benefiting Russia’s economy and, by extension, its war against Ukraine — leaving the Kremlin well placed to emerge as one of the main beneficiaries of the expanding conflict in the Middle East. ECONOMIC TURNAROUND Only several weeks ago, the mood among Russia’s economic elite was grim. The Russian finance ministry’s budget plan for this year assumed a baseline benchmark of $59 per barrel of Urals crude, the country’s main export blend. But in January, energy revenues plunged to their lowest level since 2020, compounding a disappointing tax haul. As Western sanctions, high interest rates and labor shortages strained the economy, tension between the finance ministry and the central bank on how to mitigate the damage became increasingly visible. “It was far from a collapse,” said Sergey Vakulenko, a senior fellow at the Carnegie Russia Eurasia Center. “But the government was facing tough choices, had to cut its spending and raise taxes and even consider some reduction in military expenditure.” Stopping the war in Ukraine was never on the table, Vakulenko added, but it was becoming clear that even on that front, Russia would have to “economize a bit.” Then Israel and the U.S. attacked Iran. As Tehran retaliated and the conflict spilled over into a regional war, shipping through the Strait of Hormuz has stalled, sending oil prices soaring. “Suddenly, Moscow received this gift,” said Vladimir Milov, a former deputy energy minister turned Kremlin critic in exile. “They had their lifeline.” These days, he said, Russian officials are “very, very happy.” ‘STRATEGIC MISTAKE’ Instead of selling at a discount because of Western sanctions, Russian crude may now fetch premium prices as its main buyers — India and China — scramble to secure supplies. What’s more, they’ll have Washington’s blessing.  Last Friday, the U.S. Treasury issued a 30-day waiver allowing India to buy Russian crude to “enable oil to keep flowing into the global market.” A day later, Treasury Secretary Scott Bessent said the United States could “unsanction other Russian oil,” a sharp reversal from last year’s policy of penalizing countries for buying Russian energy. Unsurprisingly, the Kremlin is using the moment to maximum advantage.  “Russia was and continues to be a reliable supplier of both oil and gas,” Putin’s spokesperson Dmitry Peskov told reporters on Friday in what sounded like a sales pitch, adding that demand for Russian energy products had increased. Meanwhile, Kremlin aide Kirill Dmitriev gloated in a series of posts on X that “the oil shock tsunami is just beginning,” criticizing Europe’s decision to cut itself off from Russian energy as “a strategic mistake.”  On Monday, pro-Kremlin commentators circulated a Wall Street Journal article predicting oil prices could skyrocket to $215. LONG GAME Energy experts warn it is too soon for Moscow to claim victory. Whether the Iran crisis proves a cure for Russia’s economy depends directly on how long it lasts. Milov, the former deputy energy minister, said that, to make a meaningful difference for the economy, Russia would need oil prices to remain at current levels for roughly a year. “One or two months of high prices would certainly help, but it won’t save it,” he said. A brief spike in prices will only “help to postpone the difficult decisions,” added Vakulenko, the analyst at the Carnegie Russia Eurasia Center.  There’s another reason why Moscow will be hoping the war drags on: With every day of fighting, the U.S. is depleting the weapon stocks Ukraine is relying upon to defend itself.  According to media reports, Russia has been providing Iran with intelligence to help it target U.S. warships and aircraft.  The assassination of Iran’s leader Ali Khamenei in a U.S.-Israeli airstrike may have dealt a blow to Russia’s promise to defend its allies, but Putin may ultimately decide it was a price worth paying.

LONDON — Britain’s graduates helped Keir Starmer’s Labour Party win power. Now they’re on the warpath. Soaring interest rates have left a cohort of voters in their 20s and early 30s — the first to be hit by an early 2010s overhaul of university funding — with spiraling student loan debts, and frustrated at sizable monthly repayments not touching the sides of what they owe. Chancellor Rachel Reeves delivers a tricky economic update Tuesday under pressure to act, and with opposition politicians — aware of bubbling rage among young professionals seeing their pay vanish — jumping on the bandwagon to offer friendlier options. Labour MPs are nervous too.  They are facing a real electoral threat from the left-wing populist Green Party, which has backed the complete abolition of university of tuition fees, and is open to student debt forgiveness. This generation of graduates is “the bedrock of Labour support,” Labour MP Chris Curtis, a former pollster and graduate on the controversial loan plan, said. He chairs the Labour Growth Group, which is campaigning on the issue. “There’s a worry about losing them” if financial pressures remain, he said. With Starmer’s place as prime minister under pressure, the row could also become a talking point in a future leadership contest. Wes Streeting, Starmer’s ambitious health secretary, said the “clearly rumbling” debate is “worth having.” In a sign of growing recognition of the problem, Starmer last week told MPs he would “look at ways” to make the student loans system in England “fairer.” Labour’s landslide majority in 2024 was built on support from graduates. A YouGov mega poll conducted after the 2024 general election found 42 percent of people with a degree or higher qualification backed Labour — compared to 18 percent for the rival Tories.  “It’s a ticking time bomb waiting to happen,” said Toby Whelton, a senior researcher at the Intergenerational Foundation, added. Graduates have been picked on “as the path of the least political resistance” by politicians, he argued. LEARN THE HARD WAY  This specific student loan problem dates back to 2012, when university tuition fees — introduced just a few years prior — soared to £9,000-a-year under the Conservative-Liberal Democrat coalition. The move was aimed at compensating for huge cuts to state funding for academic institutions. Maintenance grants for the poorest students were replaced with repayable loans in 2016.  Wes Streeting, Starmer’s ambitious health secretary, said the “clearly rumbling” debate is “worth having.” | Ian Forsyth/Getty Images Under the terms of these loans — known as “plan two,” and issued between 2012 and 2023 — students agreed to repay 9 percent of their salary over a threshold set by the Treasury. The terms of the deal last 30 years before any remaining arrears are wiped. (A different plan has been put in place since 2023.) With the interest rate on the loan tied to the retail price index (RPI) —seen as a poor measure of inflation by some analysts— graduate debts have been climbing at a time when wage growth has slowed and living costs are shooting up. Reeves’ decision last fall to keep the repayment threshold frozen at £29,385 for three years until 2030 was the final straw, and appears to have mobilized influential campaigners behind the plight of graduates. The Times newspaper launched an End the Graduate Rip-Off campaign, and the popular consumer finance journalist Martin Lewis has made it a cause, questioning the morality of the freeze. “It’s a complete mess,” said National Union of Students (NUS) Vice President for Higher Education Alex Stanley, whose members recently held a protest outside parliament dressed as sharks. “The fault initially may not be theirs, but the responsibility is absolutely now theirs,” he said of the Labour government, arguing the backlash poses an “opportunity as much as it is a threat” to Starmer.  “We’ve got a system that is costing students so much money that it risks putting off prospective students,” he warned.  “This is a very real burden on young people when it comes to the cost of living,” says Curtis. The repayments are a “deep cause of the economic insecurity that many younger graduates are facing” as they try buying their first home, he adds. Curtis supports a graduate tax, where university leavers would pay extra tax when they start earning with lower repayments, but in the near-term at least wants ministers to increase the threshold for loan repayments. ALTERNATIVE GRAD SCHEME Labour’s opponents on the right and left of British politics spy an opportunity. Green leader Zack Polanski — whose party won a seismic by-election in Greater Manchester last Thursday — said the system is “deeply unjust,” and treats “the costs of education as a private debt rather than a public investment.” Reeves’ decision last fall to keep the repayment threshold frozen at £29,385 for three years until 2030 was the final straw. | Jack Taylor/Getty Images He backs abolishing tuition fees and reversing repayment freezes, claiming “young people have been let down time and time again by governments who have chased the votes of older voters.”  Polanski told POLITICO in a statement he is open to debt forgiveness in the longer term, but admits “it’s a really complex issue, and we’d need to look carefully at how it would be funded.” Labour’s Curtis is skeptical the rival Greens have the answer, however. “People in this country aren’t idiots,” he said. “When these populist parties try to make arguments that one side of the balance sheet doesn’t have to add up to the other, voters … will realize that promises are being made that can’t be kept.”  A U-turn would not be cost-free for taxpayers. Last month, the Institute for Fiscal Studies calculated that increasing the repayment threshold in line with average earnings growth each year (as the centrist Lib Dems have proposed) would cost taxpayers around £3 billion just for graduates who started courses in 2022/23. Totally writing off existing student debts would cost tens of billions of pounds. Starmer has moved away from former Labour Prime Minister Tony Blair’s ambition for 50 percent of young people to attend university, pivoting to a target of two-thirds doing apprenticeships, higher training or going to university.  Labour will also be well aware of the problems former U.S. President Joe Biden encountered in Republican states and the Supreme Court over his student loan relief program, which would have canceled hundreds of billions of dollars in student loans. AGE OLD PROBLEM  The opposition Conservatives are backing changes too. “It’s an infuriating situation,” Tory leader Kemi Badenoch wrote in the Sunday Telegraph. “You’re paying money back, but every time you look at the outstanding amount, it’s rising. It just isn’t fair.”  The Tories have pledged to scrap additional interest applied to some student loans, and fund it by scrapping “dead end university courses.”   Tory MP David Reed, who is also in the graduate cohort hit by the student loan trap, argues women are being particularly hard hit when they temporarily leave the workplace. They are unable to make repayments, but the high interest rates mean their loan balance continues to rise. “The rules are technically the same for everyone,” Reed said. “But because women are still far more likely to take time out to raise children, the impact falls disproportionately on them.” “It’s an infuriating situation,” Tory leader Kemi Badenoch wrote in the Sunday Telegraph. “You’re paying money back, but every time you look at the outstanding amount, it’s rising. It just isn’t fair.” | Jeff J. Mitchell/Getty Images Nigel Farage’s Reform UK will address the issue at a press conference Wednesday. The party’s Treasury spokesperson Robert Jenrick has previously said interest rates are far too high. A U.K. government spokesperson said: “The student finance system protects lower-earning graduates, with repayments determined by incomes and outstanding loans and interest being cancelled at the end of repayment terms.” The spokeperson pointed out ministers are reintroducing targeted maintenance grants. Reeves argues government efforts to lower inflation will lower Bank of England interest rates, helping graduates. But with a powerful constituency calling for action, that position may struggle to hold. It is unacceptable for governments to “milk young people dry” to fund older generations’ benefits, Whelton, the Intergenerational Foundation researcher, argues. “As graduates on plan two systems get older [and] go into positions of influence and power, we will see more of a backlash,” he adds. “They will be [an] increasing voting constituency that can sway elections.”

FRANKFURT — European Central Bank staffers believe they must toe the line or face the consequences. That is the message from a staff survey conducted by the ECB in November and December, revealing that the majority have “no confidence” that they can voice their views without inviting retaliation from above. The findings threaten to blemish President Christine Lagarde’s legacy, raising questions about the quality of debate culture within the central bank under her leadership amid ongoing rumors that the Frenchwoman will end her eight-year term early. The results also land at an awkward moment, as the ECB faces legal action from its staff union over alleged efforts to curb free speech. The survey boasted a 75 percent response rate and was shared with staff during a Town Hall meeting on Thursday. The results found that 34 percent of respondents disagreed that they “can freely express” their views “without fear of negative consequences.” Another 24 percent of staffers were unsure how to respond to the statement. Longer-serving staff were more concerned about a possible backlash than newer hires. Lagarde publicly professes diversity. Just this week, she hailed the variety of voices from eurozone central bankers, saying that “diversity is an asset in times of high uncertainty.”  She has also famously blasted economists for forming a “tribal clique” at the 2024 World Economic Forum in Davos, insisting broader perspectives would always lead to better outcomes. That spirit is far from present at the ECB’s headquarters in Frankfurt’s east end, as far as the survey goes. In an interview last year, the ECB union vice president, Carlos Bowles, expressed concern that a “culture of fear” within the Bank will promote self-censorship and groupthink. The ECB’s attempts to prevent the union from airing these concerns in public prompted the legal action against the Bank. The union expresses concern about the survey’s outcome.  “When staff feel unsafe to speak openly, it is not just an HR matter — it becomes a policy risk,” a union spokesperson said. The disconnect between the ECB’s public messaging and perceptions on the ground may be at least partially attributed to the fact that less than a third of its staff believes “the ECB is open in its communication with employees,” as reflected in the survey. An ECB spokesperson said that the bank is “working together with staff and staff representatives to respond to the survey outcomes” and is “fostering a more open and supportive workplace by encouraging honest dialogue, normalizing learning from mistakes and reinforcing behaviors that promote safety and inclusion.” BROKEN CAREER LADDER While the vast majority of staff say they are proud of the ECB’s mission and feel inspired by its work, fewer than one in three would recommend it as a workplace. Career progression is a key concern — a common challenge in public financial institutions. Four out of 10 staffers don’t think they have good opportunities for professional development. That’s a bad look for the ECB’s career ladder. Worse when you include the fact that an additional 20 percent of staffers are unsure of how their career will progress within the central bank. There are some bright spots in the survey, depending on who you ask. While phrasing differences limit comparisons to previous surveys, there seems to be some progress in fair treatment. Nearly two-thirds of survey respondents said they feel the ECB has treated them fairly, whereas in past surveys, nearly two-thirds expressed concerns over favoritism. The ECB promises more progress. It is already translating survey results “into concrete steps— supporting managers in having more meaningful development conversations, creating more direct communication touchpoints with staff, and engaging with long‑tenure colleagues to understand and address their concerns,” the spokesperson said.

It might be premature for succession talks over the European Central Bank presidency, considering incumbent Christine Lagarde still has 18 months left in her eight-year reign. But speculation is rife after recent reports suggested the Frenchwoman could step down ahead of her planned exit date of Oct. 31, 2027, fast-tracking the debate over who will secure the most powerful economic post in Europe. Lagarde’s job is among three high-ranking vacancies that will emerge on the ECB’s six-person executive board next year. Eurozone leaders will have the final say on who gets a seat at the table, as part of a horse-trading exercise that considers who occupies the most influential positions in the EU — and what passports they hold. As Brussels girds itself for the usual undignified and thoroughly untransparent horse-trading, here’s your essential and speculative guide to understanding the looming ECB race. WHO’S THE FAVORITE TO SUCCEED LAGARDE? Klaas Knot, the two-term governor of the Dutch central bank and former head of the Financial Stability Board, has all the experience and qualifications needed for the job. A noted belt-tightening fiscal hawk in his first term, Knot softened his stance as the sovereign debt crisis was mastered, seemingly with one eye on the succession in Frankfurt. Some of the ECB’s current top brass see him as a little too close to politicians, but that may not count against him given it’s heads of government who make the appointment. On the minus side, Knot is currently out of the policy circuit, leaving him with no official machinery to help him campaign. That will count against him the longer the situation lasts, so anything that sounds like a starting pistol will be music to his ears. WHO’S THE INSIDER FAVORITE? Pablo Hernández de Cos, the former Bank of Spain governor, now running the Bank for International Settlements, is another highly qualified candidate. De Cos restored the Bank of Spain’s reputation after years of muddled and politically compromised leadership. However, building that reputation involved criticizing Prime Minister Pedro Sánchez’s government for its timid pension reform, which may cost him political support in Madrid. Also, moving De Cos from the standard-setting body in Basel might cost Europe a prestigious and influential seat in global finance, given the antagonism of the current U.S. administration toward Europe’s elite. Madrid has also long stated its desire to advance someone for the ECB presidency. WHERE’S GERMANY IN ALL THIS? There’s a strong sense — at least in Berlin — that it’s Germany’s turn to have an ECB president after watching two French presidents and one Italian play fast and loose with the formidable legacy of the Bundesbank and the Deutsche Mark over the last 20 years. Three candidates could put themselves forward for the job. Klaas Knot, the two-term governor of the Dutch central bank and former head of the Financial Stability Board, has all the experience and qualifications needed for the job. | Mateo Lanzuela/Europa Press via Getty Images Isabel Schnabel: The ECB’s current head of markets is keen on the position and has recently developed a conspicuous penchant for upbeat, big-picture takes on Europe’s future, which may or may not be aimed at reassuring Southern Europe that she is more than just a typical German hawk. However, precedent is against giving anyone a second term on the board and ECB insiders suggest she can be a somewhat divisive personality. Joachim Nagel: The current Bundesbank president is a more emollient figure, but has clashed more than once with Chancellor Friedrich Merz, most recently on the thorny issue of allowing the EU to issue more joint debt. A member of the Social Democratic Party, Merz’s junior partner in Berlin, Nagel may also be more useful to Merz in keeping the SPD onside in the debate over domestic policy than he would be across town at ECB headquarters. Jörg Kukies: Having been finance minister under Chancellor Olaf Scholz, Kukies has all the political connections he might need to secure the job. Although an SPD member like Nagel, Kukies’ politics are highly pragmatic and are unlikely to prevent Merz from supporting him. Isabel Schnabel, the ECB’s current head of markets is keen on the position and has recently developed a conspicuous penchant for upbeat, big-picture takes on Europe’s future. And, like ex-ECB President Mario Draghi before him, financial markets will like the fact that he also spent years at Goldman Sachs WHO’S THE FALL-BACK OPTION? International Monetary Fund Managing Director Kristalina Georgieva has a decent resume but lacks the direct political patronage at the head-of-government level that would normally be needed to land the role. However, at least her native country, Bulgaria, is now actually part of the eurozone, and no one should rule out the possibility of someone thinking of her after 16 hours of rancorous haggling in Brussels.