Fed Minutes to Reveal Hawkish Stance Amid Trump Tariff Concerns

Fed Minutes to Reveal Hawkish Stance Amid Trump Tariff Concerns

The Federal Reserve is scheduled to release the minutes of its May 6–7 Federal Open Market Committee (FOMC) meeting on Wednesday, and market participants are closely watching for clues on the central bank’s policy outlook amid rising tariff-related uncertainty.

At the May meeting, the Fed kept the Federal Funds Target Range (FFTR) unchanged at 4.25%–4.50%, in line with expectations. The decision came as the central bank continued its wait-and-see approach, first adopted in March, as inflation showed signs of stabilizing and growth remained modest.

However, a key factor hanging over the Fed’s outlook is the growing impact of trade tensions, particularly stemming from tariffs imposed by President Donald Trump. Market analysts expect the minutes to reflect a cautiously hawkish tone, with policymakers balancing a steady rate stance against the potential for renewed inflationary pressures due to trade disruptions.

While the Fed refrained from signaling any rate cuts, concerns about the economic fallout from Trump's aggressive tariff strategy—especially in relation to the European Union and ongoing negotiations with China—could shape the tone of the minutes.

The US Dollar remains under pressure, with some analysts warning that it could test its 2025 low if uncertainty around tariffs persists. Against this backdrop, the Fed minutes are expected to provide greater insight into how seriously policymakers are weighing external risks, and whether a more assertive stance might be necessary going forward.