A Federal Reserve policymaker is warning that it could make sense to raise interest rates if inflation remains elevated above the Fed’s 2% target amid uncertainty over the duration of the oil and gas price shock.

Federal Reserve Bank of Cleveland President Beth Hammack said in an interview with The Associated Press that she sees the central bank leaving the benchmark federal funds rate at its current level of 3.5% to 3.75% “for quite some time.”

Hammack also cautioned that while the Fed’s next rate move could be a cut due to labor market concerns, there is a possibility that it could be to hike rates to curb stubborn inflation.

Cleveland Fed President Beth Hammack said that the Fed may need to hike rates to tame inflation, or may be compelled to cut rates to support the labor market. (Victor J. Blue/Bloomberg via Getty Images)

“I can foresee scenarios where we would need to reduce rates… if the labor market deteriorates significantly,” Hammack told the AP. “Or I could see where we might need to raise rates if inflation stays persistently above our target.”

NY FED PRESIDENT JOHN WILLIAMS WARNS IRAN-DRIVEN OIL SPIKE COULD RIPPLE THROUGH ECONOMY

Hammack noted that the Cleveland Fed’s estimates of inflation show that it could increase to 3.5% in April. That would amount to the highest inflation reading since 2024 and a significant increase from the consumer price index’s most recent reading of 2.4% in February.

“Inflation has been running above our target for more than five years now,” Hammack said in the interview, adding that a further increase would mean inflation is “moving in the wrong direction, away from our 2% objective.”

Hammack said that the surge in gas prices caused by the Iran war is “the No. 1 thing” she hears about when talking to people within her district, adding that she and other policymakers “know that causes a lot of pain personally, as it eats up a bigger and bigger share of people’s paychecks. So it’s important for us to stay focused on it.”

POWELL WARNS OF NEW ENERGY SUPPLY SHOCK AS GAS PRICES SURGE: ‘NO ONE KNOWS HOW BIG IT WILL BE’

The Cleveland Fed president – who is also a voting member of the central bank’s Federal Open Market Committee (FOMC) that makes interest rate decisions – said that the Iran war’s economic impact will depend on how long it lasts.

If higher energy costs prompt consumers to pull back on their spending, it could slow economic growth and cause businesses to conduct layoffs, prompting the Fed to cut interest rates to support the labor market.

IRAN WAR COULD PUSH INFLATION HIGHER THIS YEAR, GOLDMAN SACHS SAYS

Federal Reserve Chair Jerome Powell said last month that it was uncertain how the Iran war would impact the economy. (Amanda Andrade-Rhoades/Reuters)

Fed policymakers will get two sets of fresh inflation data this week, starting with the Commerce Department’s personal consumption expenditures (PCE) index for February which will be released on Thursday. The PCE index is the Fed’s preferred inflation gauge and the February edition of the report was delayed by the government shutdown.

Additionally, the Labor Department will release the consumer price index (CPI) inflation report for March on Friday.

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The FOMC will hold its next monetary policy meeting on April 28–29, when it will announce whether the benchmark interest rate will be held steady, increased or reduced.

Policymakers left interest rates unchanged at their most recent meeting in March, after doing the same at the previous FOMC meeting in January.

“But if this [reverse migration] continues, it will have [a] significant impact, especially on micro, small and medium enterprises, particularly in labour-intensive sectors such as construction, textiles and manufacturing,” says Arvind Goel, co-chairman of the industrial relations committee of the Confederation of Indian Industry.

Ford Motor and other U.S. automakers have asked for relief from aluminum tariffs after fires at a major American factory created supply bottlenecks for vehicles, though the Trump administration so far has rejected the requests, according to a report.

The Wall Street Journal first reported that Ford petitioned the Trump administration for assistance, citing people with knowledge of the conversations.

The requests have come in recent weeks, according to the report, with the carmaker asking the government for relief from duties at least until Novelis’ aluminum rolling plant in Oswego, New York, returns to full service following two fires last year.

The Oswego facility, which is the largest domestic supplier of aluminum sheets for the U.S. automotive industry, is likely to remain offline until this June.

DEM SENATOR PUTS TRUMP ON NOTICE OVER ‘UNLAWFULLY COLLECTED’ TARIFF FUNDS AFTER SCOTUS LOSS

A Ford logo on a Ford F-150 pickup truck for sale in Encinitas, California, on Oct. 20, 2025. (Reuters/Mike Blake/File Photo / Reuters Photos)

The government has so far not budged, the report said, adding that the discussions are part of ongoing talks about the impact of President Donald Trump’s tariffs.

Trump officials told the companies they had already received some relief from national security tariffs last year, when major automakers were allowed to recoup part of the 25% duties on auto parts, the report said.

A Ford logo is seen on the Ford Motor World headquarters in Dearborn, Michigan, on March 12, 2025. (Reuters/Rebecca Cook/File Photo / Reuters Photos)

ONE YEAR LATER, TRUMP TARIFFS GENERATED BILLIONS AS REFUNDS TAKE SHAPE

A White House official told FOX Business via email that “the Administration is committed to a nimble and nuanced approach to reshoring manufacturing that’s critical to our national and economic security. While Ford and other automakers have raised supply concerns in light of the Novelis incident, they have not requested tariff relief on this matter in a particularly pronounced way.”

FOX Business has also reached out to Ford Motor.

“Novelis” can be read on the facade of the factory building of the company’s recycling center. Novelis is a manufacturer of rolled aluminum products. ( Klaus-Dietmar Gabbert/picture alliance via Getty Images / Getty Images)

Novelis has offset lost production by sourcing aluminum from its plants in South Korea and Europe, though those imports now face a 50% tariff under the Trump administration.

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The plant also supplies Stellantis and General Motors, but Ford is its largest customer, as its trucks, such as the F-150, rely heavily on aluminum bodies.

Reuters contributed to this report.

Shares of AXT Inc. (NASDAQ: AXTI) skyrocketed more than 19% midday Wednesday, climbing to $54.10 as investors piled into the semiconductor materials maker on renewed optimism over its role in supplying critical substrates for artificial intelligence infrastructure and data center expansion.

The stock, which manufactures compound semiconductor wafers including indium phosphide (InP), gallium arsenide (GaAs) and germanium substrates, jumped $8.64 or 19.01% from the previous close by late morning trading on April 8, 2026. Volume surged well above average, reflecting intense retail and institutional interest in small-cap AI plays amid a broader technology sector recovery.

AXT, based in Fremont, California, specializes in substrates essential for high-speed optical networking, 5G/6G communications, photonics and advanced AI chips. Indium phosphide, in particular, has emerged as a key material for high-performance lasers and transceivers used in hyperscale data centers powering generative AI workloads. Management has repeatedly highlighted strong InP demand tied directly to the AI build-out, with the company positioning itself to capture growth as cloud giants scale infrastructure.

The dramatic intraday move extended a highly volatile period for AXTI. The stock has experienced wild swings in recent weeks, including multiple double-digit percentage gains and sharp pullbacks. Earlier in March and late February, shares rallied on positive commentary around export permit improvements from China and expectations for sequential revenue growth in the first quarter. A notable dip followed an earnings-related reaction in early April, but bargain hunters quickly re-entered, driving the latest surge.

On April 7, AXT announced it would release first-quarter 2026 financial results after market close on April 30, followed by a conference call at 1:30 p.m. PT. The timing fueled speculation that investors are positioning ahead of potentially strong guidance or upbeat commentary on InP demand. In prior updates, CEO Morris Young noted improving export permit receipts in early 2026 and the company’s efforts to double indium phosphide production capacity to meet customer needs.

Analysts and market observers pointed to AXT’s niche but strategically important position in the semiconductor supply chain. While the company remains unprofitable — posting net losses in recent quarters — its products support technologies at the heart of the AI revolution. InP substrates enable faster data transmission with lower power consumption, critical for optical interconnects in AI servers and networking gear from companies like Broadcom, Cisco and others ramping up AI infrastructure.

“Demand for indium phosphide continues to be driven by AI infrastructure build-out,” Young said in earlier remarks, citing a substantial backlog and expectations for sequential growth. Some reports indicated the company’s backlog exceeded $60 million in recent periods, with particular strength in InP for photonics applications.

The company’s challenges include heavy reliance on operations in China through its Tongmei subsidiary, subject to U.S.-China trade tensions and export licensing requirements for certain materials. Earlier in 2026, AXT adjusted its fourth-quarter 2025 revenue guidance downward due to slower-than-expected indium phosphide export permits, contributing to volatility. However, management signaled improvement in early 2026, helping restore investor confidence.

AXT reported fourth-quarter 2025 revenue of approximately $23 million, with full-year revenue around $88 million. Gross margins remained under pressure, and the company continued to report net losses, reflecting investments in capacity expansion and ongoing operational costs. Analysts project continued losses in Q1 2026, with consensus estimates around a loss of $0.05 per share on revenue near $26-27 million, though beats on guidance could catalyze further upside.

Wall Street opinions remain mixed. Some firms maintain Buy ratings, citing long-term potential in AI photonics, while others have expressed caution over valuation after the stock’s massive run and persistent unprofitability. Consensus price targets have varied widely, with some significantly below recent trading levels, highlighting the speculative nature of the name. The stock has seen extraordinary gains over the past year, at times multiplying several-fold on AI enthusiasm, but also enduring sharp corrections.

Insider activity added another layer of intrigue. In March, CEO Morris Young sold shares worth approximately $1.4 million, and other executives and directors executed planned sales. Such transactions often occur for diversification or liquidity reasons and do not necessarily signal negative outlooks, though they draw attention in a high-volatility stock.

The broader market context supported the rally. Technology stocks rebounded Wednesday as investors rotated toward growth-oriented names with AI exposure. Smaller semiconductor and materials plays like AXT often amplify moves in the sector due to lower float and high retail interest.

For AXT, the path forward hinges on execution. The company continues efforts to expand capacity while navigating geopolitical risks. Its STAR Market IPO process for the Tongmei subsidiary in China remains under regulatory review, a development that could eventually provide additional capital or strategic flexibility if approved.

Investors will watch the April 30 earnings closely for updates on revenue trends, InP shipment volumes, margin improvement and any color on full-year 2026 outlook. Positive surprises on demand or permit progress could sustain momentum, while any softening in guidance or renewed export hurdles might trigger profit-taking.

AXT’s products serve diverse end markets beyond AI, including wireless communications, solar cells, LEDs and aerospace. However, the current narrative centers almost entirely on its potential role in the data center AI boom. As hyperscalers and networking firms accelerate deployments of 800G and 1.6T optical transceivers, demand for high-quality InP substrates is expected to grow substantially.

Critics note that AXT faces competition from larger, more diversified players such as Sumitomo Electric and others with stronger balance sheets. Achieving consistent profitability remains a key hurdle, with negative gross margins in some recent periods underscoring the need for scale and operational efficiencies.

Despite the risks, the stock’s performance illustrates the market’s appetite for pure-play exposure to emerging technologies. Retail traders have driven much of the recent volatility, with social media and trading forums buzzing about AXTI as an “AI sleeper” stock.

As trading continued Wednesday, attention turned to whether the surge would hold into the close or face resistance near recent highs. Technical analysts noted key support and resistance levels shifting rapidly amid the momentum.

For long-term investors, AXT represents a high-risk, high-reward bet on the semiconductor materials supply chain. The company’s ability to scale production, secure stable export permissions and improve financial metrics will determine whether the current enthusiasm translates into sustainable value creation.

In the near term, the buildup to Q1 earnings on April 30 provides the next major catalyst. With shares already reflecting significant optimism, any disappointment could lead to a sharp reversal, consistent with the stock’s history of dramatic swings.

AXT Inc. employs hundreds worldwide and operates manufacturing facilities in the U.S. and China. Its substrates are foundational components in compound semiconductors that enable faster, more efficient electronics critical to modern connectivity and computing.

As the AI infrastructure supercycle unfolds, niche suppliers like AXT find themselves in the spotlight. Wednesday’s 19% surge served as the latest reminder of how quickly sentiment can shift in this volatile corner of the market.

This article was written by

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