The Federal Reserve signalled uncertainty over future rate moves as policymakers weighed the economic impact of geopolitical tensions and inflation risks.
Minutes from the March 17–18 Federal Open Market Committee meeting showed an 11-1 vote to hold interest rates steady at 3.5% to 3.75% while assessing the fallout from conflict in the Middle East.
“Many participants judged that, in time, it would likely become appropriate to lower the target range for the federal funds rate if inflation were to decline in line with their expectations,”
The minutes stated.
Officials indicated that while rate cuts remain possible later in 2026, decisions will depend heavily on inflation trends and broader economic conditions.
Some policymakers also warned that interest rates could move higher if inflation remains above target, underscoring a two-sided policy outlook.
Concerns extended beyond inflation, with officials highlighting vulnerabilities in the labour market, particularly amid weak job creation and exposure to external shocks.
According to CME Group data, markets currently expect rates to remain unchanged through December, with a smaller probability of cuts and minimal odds of further hikes.