The Fed released the minutes of the April FOMC meeting: a rebound in inflation may force rates to stay frozen for longer, and the possibility of resuming rate hikes cannot be ruled out!

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Is interest rate cut drifting further away? The latest FOMC minutes released by the Fed reveal deep concerns among top policymakers. Influenced by the escalating conflict in the Middle East and soaring energy prices, U.S. inflation has shown signs of a resurgence, prompting the Fed to decide to freeze interest rates at 3.5% to 3.75%. Notably, this meeting saw a rare and significant divergence: not only did one member cast a dissenting vote calling for a rate cut, but three hawkish officials strongly demanded the removal of the "easing bias" from the statement. Under the dual pressure of inflation and geopolitics, the Fed's next policy move remains full of suspense. (Previous coverage: Fed rate cuts to wait until 2027! Grayscale analyzes 3 major impacts of high interest rates: Bitcoin under pressure, RWA and stablecoin issuers emerge as the biggest winners) (Background supplement: Fed mouthpiece warns: Fed focuses on new anti-inflation targets, room for rate cuts has almost disappeared) Minutes. This detailed document sends a clear signal to the market: the Fed is in no rush to pull the trigger on easing monetary policy until inflation truly cools down. The U.S. Federal Reserve (Fed) released the minutes of the Federal Open Market Committee (FOMC) meeting held on April 28-29, 2026, today (21st). According to the minutes, almost all members agreed to keep the federal funds rate target range unchanged at 3.5% to 3.75%, while maintaining the Interest on Reserve Balances (IORB) at 3.65%. In these minutes, "Middle East conflict" became the keyword dominating the macroeconomic assessment. Officials generally believe that geopolitical crises are the primary drivers of recent asset price volatility and rising inflation expectations. Looking at the data, the U.S. economy expanded steadily in the first quarter, but inflation data is not optimistic. Influenced by the sharp rise in crude oil prices and tariff policies, staff estimated that the overall PCE inflation rate in March climbed to 3.5%, and core PCE reached 3.2%. Most participants are concerned that if the Middle East conflict drags on or oil prices remain high, the difficulty of returning inflation to the 2% target will increase significantly. The minutes emphasized: "Strong commitment to achieving maximum employment and the 2% inflation target, but given the high uncertainty brought about by developments in the Middle East, current interest rates are near a neutral range, making it appropriate to wait for more data." Although the final decision was to "stand pat," this meeting rarely exposed serious internal divisions within the Fed: - The lone dissenting vote for a rate cut: Governor Stephen I. Miran cast the only dissenting vote, arguing for an immediate 25 basis point (one-quarter percentage point) rate cut to address potential economic downside risks. - Hawkish demand to erase "easing bias": On the other hand, three officials including Kashkari, Logan, and Hammack, while supporting the decision to keep rates unchanged, strongly opposed retaining an "easing bias" in the policy statement. They believe that in the current environment of stubborn inflation, implying a future inclination toward rate cuts is inappropriate. Regarding the labor market, the unemployment rate remained stable at 4.3% in March. Although employment growth was low, officials believe this is consistent with the pace of labor supply growth. Interestingly, the minutes specifically named the impact of "Artificial Intelligence (AI)": on one hand, AI investment and productivity gains have become a driving force supporting steady economic expansion; on the other hand, companies are showing signs of "delayed hiring" as a downside risk due to the adoption of AI technology or facing macroeconomic uncertainty. Looking ahead, the Fed's policy path has completely switched to a "data-dependent" mode. Officials explicitly stated that the door to rate cuts will only open if inflation clearly falls back or the labor market deteriorates significantly; conversely, if inflation remains above the 2% warning line, the Fed does not rule out the option of restarting rate hikes.

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