HOT DEVELOPMENT: FED Minutes Released! Here is Everything You Need to Know!

The minutes of the US Central Bank's (FED) meeting have been released. According to the minutes, the FED decided to significantly slow down the pace of balance sheet reduction last month. However, some participants stated that there was "no convincing reason" for this decision.

According to the minutes, policymakers agree almost unanimously that the U.S. economy is facing the risks of both rising inflation and slowing growth. Some members pointed out that the FED may face "difficult choices."

The meeting held on March 18-19 came after the Trump administration's first tariff plan. This situation led to uncertainty in the economic outlook, causing participants to advocate for a more cautious approach. It was stated that if inflation becomes persistent, interest rates could remain high for a long time, while if the economy weakens further, interest rate cuts could be on the agenda.

The FED minutes revealed that inflation has significantly slowed down over the past two years but still remains above the institution's long-term target of 2%. Some participants noted that inflation data in the first two months of the year came in above expectations. The slowdown in inflation for housing services is in line with the cooling of the rental market; however, inflation in the non-housing service sector continues to remain high. In particular, price increases in non-market services have drawn attention.

Some members pointed out that the core goods inflation has increased, and this situation may be related to rising tariff expectations. The minutes also stated that inflation could rise this year due to high tariffs, but there is great uncertainty regarding how long this effect will last.

As noted by Wall Street Journal columnist and "the spokesman for the FED" Nick Timiraos, FED officials emphasized the risks of the persistence of inflationary pressures due to tariffs while deciding to keep interest rates steady last month. The minutes included statements such as, "Most participants noted that inflationary effects arising from various factors could last longer than they expected."

Policymakers believe that the current interest rate levels are "well positioned" in terms of combating potential risks. However, it was stated that an interest rate cut could be made in the event of a weakening labor market; on the other hand, if inflation worsens, interest rates will be kept steady. Some members pointed out that if inflation becomes persistent while the growth and employment outlook weakens, the FED may have to "strike a difficult balance."