FX.co ★ FOMC Minutes Highlight Inflation Concerns Tied to Tariffs

During the March 2025 Federal Open Market Committee (FOMC) meeting, Federal Reserve policymakers anticipated an upward pressure on inflation due to high tariffs. However, they expressed uncertainty regarding the scale and duration of these effects, as revealed in the meeting minutes. A majority of the officials noted that inflationary pressures from various sources might be more prolonged than previously expected. Nearly all participants considered the risks to inflation to be skewed to the upside, while the risks to employment appeared tilted to the downside. In line with expectations, the Fed decided to maintain the federal funds rate at 4.25%-4.5%, continuing the pause in the rate-cut cycle initiated in January. Additionally, the Fed adjusted their inflation projections for 2025 and 2026 upwards and revised the 2025 growth forecasts downwards. Despite these adjustments, they still plan to decrease interest rates by approximately 50 basis points over the year, the same projection made in December.