Episode summary
Fed Minutes Show Officials Saw Two-Sided Risks From Iran War | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 45 min · Hosts: Carol Massar, Tim Stenovec · Guests: Michael McKee, Matthew Luzzetti, Ed Husain, Michelle Gass
Summary
Fed minutes showed officials split over the economic consequences of the Iran war and tariffs. Most participants saw a protracted conflict as a threat to the labor market that could justify lower rates, while many also warned that higher inflation could persist long enough to warrant rate increases. The discussion centered on whether the post-meeting statement should use more explicitly two-sided language, with some officials arguing the committee needed to preserve flexibility if inflation stayed above target.
The hosts and guests said the market reaction was limited because investors were already focused on the war itself and on incoming inflation data. The next clues, they argued, will be CPI, PPI and gasoline prices, since PCE for February will not capture the shock. The debate around the Fed was framed as mostly unresolved: the minutes were stale, the war’s duration was unclear, and the next meeting could easily sound similar.
The show later turned to Levi Strauss, where the company’s CEO said strong branding, celebrity partnerships and a shift toward a broader “denim lifestyle” are driving momentum. She said the company is seeing resilient demand, has built a diversified supply chain, and is not planning to move production back to the United States. Management also said tariffs remain an uncertainty, but it still sees a path toward sustained growth and higher profitability.
Key takeaways
- The Fed’s March minutes showed a growing group of officials open to language that would allow rate hikes if inflation stays above target.
- Most policymakers still thought a protracted Iran war could weaken labor markets enough to justify rate cuts, making the policy outlook genuinely two-sided.
- The host and guest said CPI and PPI, not PCE, will be the first real tests of whether the war is feeding through to inflation.
- Levi Strauss said strong demand, especially around its brand and collaborations, is helping the company raise guidance.
- The Levi Strauss CEO said the company is sticking with an overseas supply chain and is not planning to move production to the United States.
- The CEO said the business is expanding beyond jeans into a broader apparel market, with women’s and tops as major growth opportunities.
Notable quotes
“most participants raised the concern that a protracted war could lead to further softening of labor markets, which would warrant additional rate cuts”
“The vast majority of participants noted that progress toward the committee's 2% objective could be slower than previously expected”
“I don't think they will. It'll really depend on what happens with the inflation numbers”
“our consumer has proven resilient. I mean you see that in our numbers”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. — This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenc on Bloomberg Radio.
We are just seconds away from the minutes from the second Fed decision of 2026. Tim, that was back on March 18th. We got a rally underway though and yields have pulled back ahead of this. — Oh, that's ahead of this. Think back to when th that meeting happened though. US Treasury slumped. short-term yields soared to their highest uh in about five months. And we're getting Fed minutes in just a second.
And with that, off to Mike McKe. He's at the Fed in DC. Mike,
Well, no surprise. The Iran war and tariffs were central to the discussion among Fed officials at their March meeting. The full effect of tariffs had not yet moved through the economy, officials said.
Uh a resilient economy, they called it. and the war then then only a few weeks old raised the threat of inflation increasing and hiring slowing. Some participants judged there was a strong case for a two-sided description of the committee's future interest rate decisions in their postmeating statement reflecting the possibility that higher inflation might call for rates to be increased.
Although no member called for a rate move at that meeting, most participants raised the concern that a protracted war could lead to further softening of labor markets, which would warrant additional rate cuts. But many participants pointed to the risk of inflation remaining elevated for longer than expected, which quote could call for rate increases.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed minutes
- interest rates
- iran war inflation
- labor market
- direct-to-consumer
Companies and tickers mentioned
- DB
- LEVI
- Deutsche Bank
- Levi's
- Bloomberg
- Council on Foreign Relations
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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