The minutes released from the Federal Open Market Committee's (FOMC) March 2024 meeting showed that conflicts in the Middle East are raising oil prices, posing significant risks to inflation and employment. While the policy rate was held steady in the 3.5-3.75 percent range, officials indicated that scenarios for both rate hikes and cuts are on the table.
The minutes stressed that the rise in oil prices could delay inflation reaching the 2 percent target and that the risk of inflation becoming entrenched above the target has increased. It was also noted that the Middle East conflict could negatively affect business confidence and lead to a weakening in employment. Fed officials, drawing attention to heightened economic uncertainties, noted that these developments have raised downside risks to the economic activity outlook.
Some officials stated that if inflation declines in line with expectations, the policy rate could be reduced over time, but that rate hikes might be needed if high inflation persists. Overall, the minutes revealed that a cautious stance is being maintained against rising risks to inflation and employment.