The latest minutes of the Federal Reserve’s March monetary policy meeting show that affected by the Iran war, policymakers have obvious differences on the US economic outlook, and discussions on interest rate adjustments have fallen into a dilemma, bringing uncertainty to the global financial market.

The meeting minutes show that most officials are worried that the long-term continuation of the Iran war will impact the labor market and that interest rate cuts are needed to stabilize the economy; however, other officials emphasize that the risk of inflation rising still exists, and a subsequent interest rate hike cannot be ruled out. The vast majority of officials believe that it may take longer to bring inflation back to the 2% target, which also means that the Federal Reserve’s high interest rate policy may last longer.

According to CME “Fed Watch” data, the probability that the Federal Reserve will keep interest rates unchanged in April is 98.4%, and the probability of an interest rate hike is only 1.6%; the probability of keeping interest rates unchanged in June is still as high as 96.8%, and the probability of an interest rate cut or hike is less than 2%. The Federal Reserve has kept interest rates unchanged in the range of 3.5%-3.75% for two consecutive times, and predicts that there will be only one interest rate cut throughout 2026, with the space for interest rate cuts greatly narrowed.

Analysts point out that although the US-Iran ceasefire has eased some geopolitical risks, the rise in energy prices may still push up inflation. The Federal Reserve is likely to maintain a “prudent wait-and-see” attitude, and the possibility of an interest rate cut in the first half of the year is extremely low. The uncertainty of the interest rate path will continue to affect global capital flows and asset pricing.