Fed Minutes to offer clues on rate cut outlook amid tariff uncertainty
- The Minutes of the Fed’s March 18-19 gathering are due on Wednesday.
- The Federal Reserve delivered a cautious hold at its March event.
- Investors contemplate a potential rate cut at the May 7 meeting.
The eagerly awaited minutes from the United States (US) Federal Reserve’s (Fed) March 18-19 monetary policy meeting are set for release on Wednesday at 18:00 GMT. During the gathering, policymakers agreed to keep the Fed Funds Target Range (FFTR) unchanged at 4.25%-4.50%.
The latest Summary of Economic Projections (SEP) update highlighted a palpable sense of uncertainty within the Federal Open Market Committee (FOMC).
Indeed, their revised outlook for 2025 and 2026 was notably pared back, signaling caution among policymakers. Yet, despite the more conservative expectations, the Fed’s forecast still anticipated two cuts to the federal funds rate in 2025, underscoring a continued commitment to monetary easing.
The Fed delivered a hawkish hold, and Powell confirmed it
In a decisive move, the Federal Open Market Committee unanimously voted to hold the policy rate steady this March. Yet, two issues dominated the discussions: a cloud of uncertainty and the looming impact of US tariffs.
In his routine press conference, Federal Reserve Chair Jerome Powell characterized the uncertainty as "unusually elevated." He explained that central bank officials were wrestling with major challenges in updating economic projections amid a flurry of new policy moves from the Trump administration. Powell warned that the Fed could face delays in pushing forward its inflation targets, as inflation had begun to climb—an effect he attributed, at least in part, to the tariffs.
Speaking to business journalists in Virginia on April 4, Powell remarked that President Donald Trump's new tariffs proved to be “larger than expected.” He painted a picture of an economic landscape where rising tariffs could trigger higher inflation and slower growth, potentially pushing the central bank into a series of tough decisions.
Adding to the conversation, Federal Reserve Governor Adriana Kugler observed that the recent surge in goods and market-services inflation might be a prelude to the full impact of the tariffs. She stressed that despite the shifting economic tides, the Fed’s paramount priority must remain keeping inflation in check.
When will FOMC Minutes be released and how could it affect the US Dollar?
The FOMC is set to release the Minutes from its March 18-19 policy meeting at 18:00 GMT on Wednesday, and market watchers are bracing for key insights.
Participants will be particularly alert for any hints regarding a slowdown in the pace of quantitative tightening (QT) and for discussions that led rate setters to project “stagflationary” scenarios on their updated “dots plot”.
Chair Powell reassured that the economy remains well positioned, although growing uncertainty and a potential slowdown in economic activity could put pressure on the US Dollar (USD). The debate over the probable impacts of US tariffs is also expected to feature prominently.
At a recent briefing, Senior Analyst Pablo Piovano of FXStreet offered an outlook on the US Dollar Index (DXY).
He argued, “In case sellers regain the upper hand, the index should meet its immediate contention at its 2025 bottom of 101.26 (April 3) and further down at the 2024 trough of 100.15 (September 27), just shy of the crucial 100.00 level.”
“Occasional bouts of strength, on the other hand, should initially find resistance at the weekly peak of 104.68 (March 26), an area just below the critical 200-day Simple Moving Average at 104.83. While below that level, extra losses in DXY should remain well on the cards,” he added.
Piovano also noted that momentum indicators hint at further near-term retracements—with the daily Relative Strength Index hovering around the 42 region and the Average Directional Index near 37, suggesting that the current trend might be gathering additional force.
Economic Indicator
FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Next release: Wed Apr 09, 2025 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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