On the evening of April 8 (Beijing Time), the Federal Reserve will release the minutes of its March monetary policy meeting. Global markets are focusing on key signals regarding the timing of rate cuts and inflation assessments. Currently, expectations of Fed easing have rebounded, as the US-Iran ceasefire alleviates inflation pressure and creates room for looser policy, causing volatility across global asset prices.
At the March meeting, the Fed kept interest rates unchanged but lowered its inflation outlook, sending a moderately dovish signal. The minutes will be scrutinized for two main messages: first, policymakers’ judgment on the pace of inflation decline and whether they confirm inflation is firmly on a downward path; second, the level of disagreement over the timing of rate cuts and whether more officials support a June cut.
CME interest rate futures show markets now price in a 72% probability of a Fed rate cut in June, up 15 percentage points from before the ceasefire. A clear dovish signal in the minutes would further weaken the US dollar index, trigger capital flows into emerging markets, and benefit stocks, bonds, and precious metals simultaneously. A hawkish tone emphasizing lingering inflation risks would cool rate-cut bets, strengthen the dollar, and pressure risk assets.
Globally, the Fed’s policy shift directly impacts exchange rates and capital flows in emerging markets. The central parity rate of the RMB against the US dollar was set at 6.8680 on the day, up 174 basis points, reflecting continued RMB strength. If the Fed begins cutting rates, RMB assets will become even more attractive, with northbound capital likely to flow steadily into A-shares and the Chinese bond market.
Moreover, central banks in the eurozone, the UK, and elsewhere are closely following the Fed’s lead. Should the Fed cut first, the ECB and BOE may follow suit, triggering a global easing cycle. With slowing global growth and the IMF warning over Middle East-related drags, markets increasingly expect central bank intervention.
Analysts view the minutes as a potential turning point for global markets. Against the backdrop of easing Middle East tensions, the Fed is likely to adopt a dovish tone, paving the way for a June rate cut. Investors will focus on three keywords: inflation, rate cuts, and economic outlook, to guide global asset allocation strategies.
