Fed’s March Meeting Minutes: Rising Inflation Risks, Rate-Cut Expectations Pushed Back

The Federal Reserve’s March meeting minutes revealed that a majority of participants believe the process of inflation returning to 2% may be slower than previously anticipated, and the risk of persistently elevated inflation has increased. Rising oil prices stemming from tensions in the Middle East were viewed as potentially fueling inflation, heightening economic uncertainty, and posing downside risks. Regarding the policy path, an increasing number of participants see sufficient justification for adopting a “two-way” formulation—namely, raising rates remains possible if inflation does not clearly decline, while rate cuts may become necessary should the economy or labor market weaken. Some participants have further pushed back their expectations for the timing of rate cuts.