- Monetary Policy: Most policymakers favored caution in easing policy due to inflation concerns. Data dependence was emphasized in judging inflation’s path towards the 2% target.
- Interest Rates: No rate cuts expected until inflation shows sustained decline. The current restrictive policy stance is likely to persist for some time, though its duration remains uncertain.
- Economic Outlook: Fed staff acknowledged downside risks and placed some weight on a slower-than-expected inflation slowdown. Their overall economic outlook was slightly more optimistic than the December projection.
- Market Reaction: The initial hawkish expectations led to USD selling, followed by relief upon realizing the minutes lacked a more aggressive stance.
In short: The Fed remains cautious about inflation and committed to keeping interest rates high until inflation is under control. While economic risks are acknowledged, the overall outlook is slightly improved. The market reacted positively to the less-hawkish-than-feared message.