Many Fed officials think next move will be a rate cut, March meeting minutes show

MW Many Fed officials think next move will be a rate cut, March meeting minutes show

By Greg Robb

Some officials see 'strong case' for a hike but they are in the minority

Federal Reserve Chair Jerome Powell has said it is still too soon to know Iran war's impact on U.S. economy.

Federal Reserve were split about whether the war with Iran would hurt the labor market or boost inflation, but more officials were worried about the outlook for jobs, minutes of the Federal Reserve's March policy meeting show.

More officials were in the camp that the next move by the Fed would be to lower rates.

"Many" officials "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 said.

Only "some" officials judged there was a "strong case" for the Fed to be open to the possibility that the next move could be a rate hike.

Prior to the start of the war, the Fed was on a path to slowly lower rates as inflation moved back to target. The spike in gasoline prices since the start of the conflict has threatened to upset that plan.

At their meeting held March 17-18, Fed officials kept rates steady in a range of 3.5% to 3.75% for a second straight meeting. Fed Chair Jerome Powell chose not to say too much about how the energy shock would affect the economy, adopting a "wait and see" stance.

Fed officials stuck to a forecast of one rate cut this year, but economists think the Fed is in no rush to do anything with rates.

In their discussion on the impact of the war, "most" Fed officials said that a protracted conflict would soften labor-market conditions, "which could warrant additional rate cuts." That's because higher oil prices could reduce household spending power.

A smaller number of Fed officials made the case that the war raised the risk that inflation would remain elevated for longer than otherwise expected. That could call for rate increases to help bring inflation down.

Officials concluded that it was "too early to know" how the conflict would affect the economy. Fed officials said it was important to remain "nimble."

The U.S. and Iran entered into a two-week cease-fire late Tuesday as U.S. President Donald Trump's unilateral deadline for a reopening of the Strait of Hormuz arrived.

Don't miss: Iran moves to put the brakes on reopening the Strait of Hormuz

-Greg Robb

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April 08, 2026 14:06 ET (18:06 GMT)

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