1. Report Industry Investment Rating No relevant information provided. 2. Core Viewpoints of the Report - The Fed maintained the federal funds rate target range at 3.50%–3.75% in the March FOMC meeting, and its policy focus has shifted to re - evaluating inflation risks after a previous round of preventive easing [1][4]. - The current policy environment involves a prudent balance among growth, inflation, and geopolitical risks, rather than just the single logic of "growth slowdown" [4][20]. - The Fed still has some room for rate cuts this year, but the threshold has significantly increased, and future rate path decisions will more depend on whether oil price shocks and inflation expectations can stabilize [4][21][22]. 3. Summary by Relevant Catalogs 3.1. The Interest - Rate Meeting's Inaction Meets Expectations, and the Balance between Economy and Inflation Remains to Be Observed - On March 19, the Fed kept the federal funds rate unchanged. In the context of high inflation and rising oil prices due to the Middle - East situation, it chose to wait and observe the new balance among growth, employment, and inflation [6]. - The Fed believes the U.S. economy is expanding at a "relatively robust" pace, employment growth is low, the unemployment rate has changed little, and inflation is still "somewhat high" [6]. - SEP shows that the median forecast of the federal funds rate at the end of 2026 is still 3.4%, indicating about one 25bp rate cut this year, the same as in December 2025 [7]. - Stephen I. Miran opposed keeping the interest rate unchanged and favored a 25bp rate cut, but the mainstream view is to maintain the status quo [8]. 3.2. Market Reaction: Limited Downward Space for Short - Term Rates, and Long - Term Rates More Reflect Oil Price and Inflation Disturbances - The Fed's decision to keep the interest rate unchanged restricts the downward space of short - term yields. After the decision, the S&P 500 index fell slightly, 1 - 10 - year U.S. Treasury yields rose about 5bp, and the U.S. dollar index rose about 0.5% [11]. - Long - term rates are affected by multiple factors. Due to the Middle - East situation pushing up oil prices and the unresolved U.S. fiscal deficit and Treasury supply pressure, long - term rates lack downward momentum and are more constrained by re - inflation expectations and rising risk premiums. The 30 - year Treasury yield rose only 2.5bp on the day of the meeting [12]. 3.3. Reasons for the Suspension of Rate Cuts 3.3.1. Growth Momentum Remains Resilient - The Fed does not think the current economic environment requires immediate additional easing. The U.S. economy is expanding at a "relatively robust" pace, and the current monetary policy helps achieve the dual goals of employment and inflation [15]. 3.3.2. Employment is Cooling Marginally, but It Has Not Triggered an Urgent Need for Policy Hedging - Employment growth is low, but the unemployment rate has changed little, indicating that the labor market is cooling rather than deteriorating rapidly. Employment weakness is an important variable for the Fed to observe, but it is not enough to dominate the policy direction for now [17]. 3.3.3. Inflation Remains Sticky - Inflation is still "somewhat high". The Fed emphasizes the uncertainty of the Middle - East situation's impact on the U.S. economy. Higher energy prices will push up overall inflation in the short term, and the Fed prefers to observe the transmission of oil price shocks to inflation and inflation expectations before deciding whether to resume rate cuts [20]. 3.4. Policy Signals - The Fed's policy focus has returned to the balance of observing the two - way risks of inflation and growth, rather than turning to radical easing [21]. - There is still room for rate cuts this year, but the threshold is high. The SEP's median forecast of the federal funds rate at the end of 2026 is 3.4%, corresponding to about one 25bp rate cut, but it is not a commitment [21]. - The determining variable for the future interest rate path has shifted from "whether to support growth" to "whether oil price shocks and inflation expectations can stabilize" [22].

Core Insights - The Federal Reserve official Moussailem has raised the risk assessment for the labor market while lowering the inflation risk assessment [1] Group 1 - The labor market risk assessment has been increased, indicating potential concerns regarding employment and workforce stability [1] - The inflation risk assessment has been decreased, suggesting a more optimistic outlook on price stability and inflation control [1]

Core Viewpoint - The Federal Reserve is experiencing internal divisions regarding the timing and extent of interest rate cuts, particularly for the September meeting, with some officials advocating for a cautious approach while others push for aggressive cuts [1][2]. Group 1: Federal Reserve Officials' Perspectives - San Francisco Fed President Mary Daly opposes a 50 basis point cut in September, suggesting it may signal unnecessary urgency, and supports a gradual shift towards a more neutral policy stance over the next year [1][2]. - Chicago Fed President Austan Goolsbee urges against hasty rate cuts until inflation is fully under control, highlighting the differing views within the Fed [1]. - Daly's stance contrasts sharply with calls from Trump administration officials for more aggressive rate cuts, including Treasury Secretary Janet Yellen's suggestion for a 50 basis point cut in September [1]. Group 2: Labor Market Assessment - Daly's assessment of the labor market has shifted from "solid" to "softening," indicating a need for policy adjustments in response to changing economic conditions [3]. - Although layoffs remain low, the time it takes for unemployed individuals to find new jobs is increasing, supporting the need for recalibrating monetary policy [3]. Group 3: Inflation Outlook - Daly expresses a relatively optimistic view on inflation risks, noting that the mild response of goods inflation to higher tariffs suggests that the severe psychological impacts of price surges have diminished [4]. - Companies have found ways to absorb tariff costs rather than passing them onto consumers, which supports the argument for initiating a rate-cutting cycle as inflation pressures are not as severe as previously feared [4].