The minutes of the latest US Federal Reserve meeting provide insight into policymakers’ assessment of current economic conditions.
As expected, markets closely scrutinise this document, given the direct influence of US interest rates on global financial conditions.
Middle East uncertainty and inflation risks
During the 17–18 March meeting, policymakers expressed concern about the potential inflationary impact of the conflict in the Middle East. Rising oil prices could feed into broader consumer prices, increasing the risk of inflation deviating from the 2% target.
While some officials did not rule out rate hikes in response, such a shift would mark a significant change in policy direction. However, this scenario remains unlikely at this stage.
Monetary easing remains the base case
Policymakers expect the oil shock to be temporary, not strong enough to derail disinflation, and maintain a reassuring stance overall.
The next policy move is still expected to be a rate cut, with several members reaffirming their intention to ease monetary conditions before year-end.
Markets awaiting clarity
The current geopolitical situation has introduced a layer of uncertainty, delaying policy action. This uncertainty has weighed on financial markets in recent weeks. Nonetheless, the longer-term outlook for US equities remains constructive, supported by the expected continuation of accommodative monetary policy.
The US labour market provides additional reassurance. After a weak performance in 2025, with only 116,000 jobs created over the year, recent data suggest a rebound in momentum.
Improving employment dynamics
In March, 178,000 jobs were created, offsetting February’s decline and confirming the strength observed in January. With 205,000 jobs added since the beginning of the year, the first quarter of 2026 has already surpassed total job creation in 2025.
Labour market as a key driver
A resilient labour market is essential to sustain household confidence and consumption, particularly amid rising fuel prices.
Given that consumption accounts for around 70% of US GDP, employment conditions remain a critical determinant of economic activity.
Ongoing economic expansion
Although rising inflationary pressures may moderate growth in the coming months, the low unemployment rate (4.3% in March) supports continued expansion.
Even in a less favourable global scenario, the US economy appears well-positioned to absorb shocks and recover relatively quickly.
Structural role of US assets
US financial markets remain central to diversified portfolios. The depth and liquidity of both equity and bond markets, combined with the concentration of leading global companies, continue to underpin their strategic importance.
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