Summary
- The Federal Reserve said fallout from the Iran war has increased uncertainty over the direction of interest-rate policy.
- According to the FOMC minutes, the U.S. economy is facing forces that could support both a rate cut and a rate hike after the war.
- The Fed kept its benchmark rate at 3.50%% to 3.75%% at its March meeting, and officials have appeared inclined toward keeping rates unchanged for the time being.
Forecast Trend Report by Period
The Federal Reserve said fallout from the war involving Iran has increased uncertainty over the direction of interest-rate policy. Conflicting effects on growth and inflation have made the policy outlook harder to judge.
Minutes of the March Federal Open Market Committee meeting, released on April 8, showed policymakers saw the U.S. economy facing pressures that could justify either a rate cut or a rate hike after the war.
Most participants said a cooling labor market could strengthen the case for lower rates. Some, by contrast, raised the possibility of a rate increase, citing inflation pressures.
The minutes said “some participants judged that it could be appropriate to raise the target range for the federal funds rate if inflation were to remain persistently above target,” adding that there was sufficient basis to describe future rate decisions as subject to risks in both directions.
They also said an overwhelming majority of participants viewed upside risks to inflation and downside risks to employment as both elevated. Those risks could grow further depending on developments in the Middle East.
The Fed left its benchmark rate unchanged at 3.50% to 3.75% at the March meeting. Since then, officials have appeared inclined to keep rates on hold for the time being as they assess the impact of the war.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
