Breaking: Fed minutes reinforce higher-for-longer narrative

The Minutes from the Federal Reserve’s (Fed) April 28–29 meeting, which were released on Wednesday, revealed a noticeably hawkish tone beneath the surface, with many policymakers signalling they would have preferred to remove the easing bias from the policy statement altogether.

Officials broadly agreed that inflation risks remain tilted to the upside, particularly against the backdrop of escalating tensions in the Middle East, rising energy prices and lingering tariff pressures. According to the minutes, the majority of participants said some additional policy firming would likely become appropriate if inflation continued to run persistently above the Fed’s 2% target.

Policymakers also acknowledged that the conflict in the Middle East could materially alter the balance of risks and complicate the appropriate policy path going forward. Several members warned that elevated Oil prices and tariffs could eventually cause inflation pressures to become more deeply embedded across the broader economy, making it harder for the Fed to justify easing policy anytime soon.

At the same time, the Minutes left the door open for cuts later in the year under a more benign scenario. Several participants noted that rate reductions could become warranted if the geopolitical situation stabilised quickly and inflation pressures resumed easing in a convincing way.

Still, the broader message from the Minutes leans clearly cautious. Participants generally judged that persistent inflation and geopolitical uncertainty may require the current restrictive policy stance to remain in place for longer than previously anticipated.

The document also showed that only a smaller group of officials felt rate cuts would be appropriate on clearer evidence that disinflation was firmly back on track.

Importantly for markets, the Fed staff’s economic outlook was upgraded slightly compared with the March meeting, reinforcing the idea that policymakers still see the US economy as resilient despite tighter financial conditions and geopolitical headwinds.

To sum up

The Fed Minutes reinforced the market’s growing higher-for-longer narrative. Policymakers appear increasingly uncomfortable with lingering inflation risks, especially as higher energy prices and geopolitical uncertainty threaten to delay the disinflation process. Unless inflation cools meaningfully or Middle East tensions ease sharply, the Fed still looks far from signalling an imminent dovish pivot.

Market reaction

The Greenback remains on the back foot on Wednesday, prompting the US Dollar Index (DXY) to test the 99.00 support as investors continue to assess the likelihood of a US-Iran deal, temporarily setting aside steady bets for a tighter-for-longer Fed.

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD -0.13% -0.30% -0.10% 0.06% -0.63% -0.58% -0.17% EUR 0.13% -0.19% 0.02% 0.18% -0.51% -0.45% -0.05% GBP 0.30% 0.19% 0.21% 0.37% -0.34% -0.26% 0.13% JPY 0.10% -0.02% -0.21% 0.16% -0.53% -0.47% -0.07% CAD -0.06% -0.18% -0.37% -0.16% -0.69% -0.59% -0.23% AUD 0.63% 0.51% 0.34% 0.53% 0.69% 0.06% 0.45% NZD 0.58% 0.45% 0.26% 0.47% 0.59% -0.06% 0.39% CHF 0.17% 0.05% -0.13% 0.07% 0.23% -0.45% -0.39% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

This section below was published as a preview of the FOMC Minutes of the April 28-29 meeting at 13:15 GMT.

The FOMC Minutes could provide fresh clues on how divided officials were before Kevin Warsh takes over as Fed Chair.

Investors will scrutinize whether policymakers questioned the Fed’s easing bias in April.

Persistent inflation pressures and higher Oil prices have shifted market expectations from rate cuts toward possible tightening.

The Minutes of the United States (US) Federal Reserve’s (Fed) April 28-29 monetary policy meeting will be published on Wednesday at 18:00 GMT. The US central bank decided to leave the policy rate unchanged at the 3.50%-3.75% range at that meeting, although the decision revealed an unusually high degree of disagreement within the Committee.

Fed Governor Stephen Miran voted in favor of a 25-basis-point (bps) rate cut, while Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan dissented against maintaining an easing bias in the policy statement.

Jerome Powell and company opted to hold rates in April

The Federal Open Market Committee (FOMC) kept rates unchanged in April for a third consecutive meeting, but the focus quickly shifted to the internal divide over the future policy direction. While policymakers broadly agreed on keeping rates steady, disagreement emerged over the communication surrounding the next move.

In the post-meeting statement, the Federal Reserve retained language suggesting an easing bias, implying that future policy adjustments could still lean toward rate reductions if conditions warrant. However, several policymakers appeared increasingly uncomfortable with maintaining that message amid rising inflation risks.

Since the April meeting, the macroeconomic backdrop has shifted significantly. Inflation concerns have intensified following stronger-than-expected price data and higher energy costs linked to geopolitical tensions. Consumer Price Index (CPI) inflation accelerated to 3.8% YoY in April, its highest level in three years, while elevated Oil prices continue to fuel fears of broader price pressures.

At the same time, labor market data remains relatively resilient, reducing the urgency for policy easing. April’s Nonfarm Payrolls showed 115K new jobs created in the US, below the stellar 185K reported in March, but well above the 62K expected.

Previewing the release, Bank of America analysts expect the publication to reinforce the Fed’s recent hawkish tone. They noted that policymakers likely focused on persistent inflation risks and upside pressures linked to geopolitical developments, while Wells Fargo analysts expect the Minutes to provide additional details on whether non-voting members also viewed the next policy move as being equally likely to be a hike or a cut.

The publication could also attract additional attention because it represents the final set of Minutes linked to Jerome Powell’s tenure as Fed Chair before Kevin Warsh officially takes over leadership of the central bank.

When will FOMC Minutes be released and how could it affect the US Dollar?

The FOMC will release the Minutes of the April 28-29 policy meeting at 18:00 GMT on Wednesday.

Market expectations on interest rates have changed sharply over recent weeks. Fed funds futures have shifted away from pricing rate cuts and now reflect growing expectations that rates could remain unchanged for an extended period, with some investors even seeing the risk of higher rates later this year.

According to the FdWatch tool, the chances of a Fed 25 bps rate hike by December sit at 40.1%, against only 43.4% for a hold.

This positioning suggests that the US Dollar (USD) could react strongly if the Minutes reveal broader support for removing the easing bias or indicate that more officials discussed conditions that could eventually justify tighter monetary policy.

The Greenback could gather additional strength if policymakers express rising concerns that inflation risks are becoming more persistent, particularly if discussions show that upside risks outweigh concerns about economic growth.

Conversely, the US Dollar could come under pressure if the publication highlights that most policymakers still considered inflation shocks linked to energy prices as temporary and continued to see the next policy move leaning toward easing once price pressures moderate.

Nevertheless, any market reaction could remain limited as investors may prefer to wait for additional inflation and labor market data before reassessing expectations for the June FOMC meeting under Kevin Warsh’s leadership.

US Dollar Index 4-hour chart

The US Dollar Index (DXY) trades at 99.43 at the time of writing. The near-term tone is bullish as price holds above both the 100-period and 200-period Simple Moving Averages (SMAs) on the 4-hour chart, reinforcing a constructive structure after breaking and moving above the prior downward trend-line resistance. Momentum is stretched, with the Relative Strength Index (RSI) hovering in overbought territory near 72, which suggests upside pressure persists but also leaves the index vulnerable to a corrective pause if buyers lose conviction just below nearby Fibonacci resistance.

On the topside, immediate resistance emerges at the 61.8% Fibonacci retracement, drawn from the March 31 high to the April 17 low, at 99.49, with a break there exposing the 78.6% Fibonacci retracement at the 100.00 round level and the recent swing high near 100.64 as a more significant barrier. On the downside, initial support aligns with the 50% retracement at 99.13, ahead of a broader demand band clustered around the 38.2% Fibonacci retracement at 98.78, the 200-period SMA near 98.59 and the 100-period SMA around 98.50, while deeper pullbacks would look to the 23.6% Fibonacci retracement at 98.34 and the prior swing low at 97.63 to limit losses.

(The technical analysis of this story was written with the help of an AI tool.)