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Real-time News
On April 9th, Federal Reserve officials weighed different scenarios for the U.S. economy following the outbreak of war with Iran, including scenarios requiring interest rate cuts and scenarios potentially requiring rate hikes. The minutes of the March FOMC meeting, released Wednesday, showed that most officials were concerned that the war could impact the labor market, necessitating lower interest rates. At the same time, many officials also emphasized the risks of inflation, which could ultimately require a rate hike. The minutes showed that an increasing number of officials recommended including related wording in the post-meeting statement, mentioning the possibility of a rate hike under certain conditions. The minutes stated: "Some participants believed that there were good reasons to include a two-way description of future interest rate decisions in the post-meeting statement to reflect that raising the target range for the interest rate might be appropriate if inflation persists above the target level." Following the March meeting, several Fed policymakers indicated a preference for keeping interest rates unchanged while assessing the impact of the war. Overall, policymakers response to the war reflects their concern about the risks of their dual mandate. The minutes stated, "The vast majority of participants believed that both upside risks to inflation and downside risks to employment remained at high levels, and most participants noted that these risks had increased as the situation in the Middle East developed." At the March meeting, Federal Reserve officials maintained the benchmark policy rate in the range of 3.5% to 3.75%.Federal Reserve meeting minutes: The economic outlook of Federal Reserve staff projected that economic activity would be weaker than expected at the January meeting.Federal Reserve meeting minutes: War may slow the decline in inflation as expected.Federal Reserve meeting minutes: Most officials believe monetary policy is in a favorable position.Federal Reserve meeting minutes: Participants generally agreed that the current policy rate is within a reasonable and credible neutral interest rate range.
