Minutes Show Fed Officials See Differing Risks From Iran War

• Fed officials were concerned about the Iran war and tariffs, with tariffs' full effect not yet seen.
• A protracted war was seen by most as a risk to the labor market, potentially warranting rate cuts.
• Many participants also noted the risk of elevated inflation, which could call for rate increases, indicating a two-sided debate on future policy.

The March Fed minutes reveal a divided committee grappling with the economic impact of the Iran war and tariffs. While some officials worried about a protracted war hurting the labor market and warranting rate cuts, others highlighted the risk of persistent inflation that could necessitate rate increases. Most felt it was too early to fully assess the war's impact, with some pushing rate cut expectations further out.