Minutes Reveal

• The Federal Reserve released minutes from its April 16 policy meeting, revealing internal division over the appropriate timeline for interest rate cuts, with several governors questioning whether inflation has declined sufficiently to warrant near-term reductions. • Hawks on the committee expressed concern that premature rate cuts could reignite price pressures, while doves argued that pausing at 5.5% risks unnecessarily constraining growth and employment, setting the stage for a contentious May 2 vote. • Market reactions to the minutes were mixed, with bond futures pricing in only a 28% probability of a rate cut by July 2026, down from 35% before the release, while equity index futures declined 0.6% on expectation of extended higher rates.

• The Federal Open Market Committee met on March 17–18, 2026, noting uncertainty in the economic outlook with options markets pricing a 30% probability of rate hikes early next year. • Broad equity indexes declined sharply while S&P 500 one-month volatility rose, driven by investor concerns over Middle East developments weakening confidence. • Financing conditions stayed restrictive for households, small businesses, and commercial real estate due to high costs and tight underwriting, though corporate debt spreads remained narrow.