Fed Minutes Show Conflict Concerns, Rates Unchanged

Federal Reserve policymakers expressed significant concerns about the economic fallout from the ongoing U.S.-Israeli conflict with Iran during their March 17-18 meeting, according to minutes released on Wednesday. The Federal Open Market Committee voted unanimously to keep the benchmark interest rate steady in a range of 3.5 percent to 3.75 percent, citing heightened uncertainty from the war's effects on oil prices, inflation and employment.

The meeting occurred several weeks after the conflict escalated, with fighting disrupting energy supplies and driving oil prices to nearly 118 dollars per barrel at their peak. Officials noted that a prolonged war could lead to persistent energy cost increases, pushing inflation higher and potentially passing through to core prices excluding food and energy. Inflation had already hovered around 3 percent, well above the Fed's 2 percent target, with services and housing costs showing limited progress in cooling even before the conflict. "Participants noted that a prolonged conflict in the Middle East would likely lead to more persistent increases in energy prices and that these higher input costs would be more likely to pass through to core...