Fed minutes: split on rate cuts as Middle East risk clouds inflation path

The US Federal Reserve released minutes from its March 17–18 meeting, showing a split on future rate cuts as Middle East tensions raise policy uncertainty. Policymakers voted 11–1 to keep the federal funds rate target at 3.5%–3.75%. Inflation was the key hurdle. Many officials said further rate cuts would likely be appropriate only if inflation falls in line with expectations. They also stressed that it is “too early to know” how Middle East developments will affect the US economy. The minutes kept a two-sided stance: if inflation stays above target, officials could still consider rate hikes. The labor market added caution. Participants pointed to weak job growth and said conditions “appeared vulnerable to adverse shocks,” which could change how the economy reacts to external stress. Crypto traders should focus on liquidity. Lower rates often support risk assets and crypto through reduced borrowing costs and improved risk appetite, but these minutes are not a clearly dovish signal. Rate hikes remain possible, and geopolitical uncertainty may delay the market’s pricing of rate cuts. CME Group probabilities for the next December meeting: 75.6% no change, 20.4% a cut, 2.4% a hike. The next Fed decision is set for April 28–29.