The Federal Reserve's March minutes are coming tonight! Under Middle Eastern conflict, how much confidence do officials have left to cut interest rates?

How strong is the confidence of the Fed officials’ inflation expectations?

Investors will scrutinize every word for disagreements among Federal Reserve officials. In the March meeting room, are officials uniformly maintaining the status quo outwardly, or are some secretly proposing rate hikes?

At 2 a.m. Beijing time on Thursday, the Fed will release the minutes of the March meeting. Meanwhile, investors are assessing the surge in oil prices and the escalating geopolitical tensions, which are making inflation prospects more complex.

The March policy meeting was held against the backdrop of accumulating geopolitical risks. This minutes will reveal how officials weighed these risks before the latest escalation, and how much relevance their thoughts still hold today.

Since the Iran war began on February 28, borrowing costs have risen sharply, and the market is under enormous pressure, which has effectively tightened the financial environment even without any policy actions from the Fed.

Investors will be watching closely how officials discuss inflation expectations. Fed Chair Powell, Kansas City Fed President Esther George, and St. Louis Fed President James Bullard have all warned in recent weeks that, if inflation remains high, long-term inflation expectations could become unanchored and rise.

“I don’t take firmly anchored inflation expectations for granted as an absolute truth. I know we must work hard for this every day,” Bullard admitted in a speech last week. So far, despite short-term data bouncing around, long-term inflation indicators remain stable. This minutes should reveal how confident officials are about how long this stability can last.

Market expectations for the interest rate path will also be a focus. During the March meeting, the market still expected the Fed to cut rates once later this year. While this view has not completely vanished, it has become increasingly uncertain. Higher oil prices and a tighter financial environment make it harder for the Fed to find excuses to loosen policy. The minutes may also discuss what factors could force officials to consider resuming rate hikes, which will definitely pique investors’ interest.

Investors will also analyze every word about how officials describe risk balancing and whether there are serious disagreements on this point. A divided Fed would tend to hold steady and keep rates unchanged; whereas a highly unified Fed could potentially reverse market expectations entirely.