The Fed left interest rates on hold at a 22-year high of 5.25%-5.5% last month with a strong indication that it was done with the rate hikes. However, the minutes of the last FED Meeting which released on Wednesday did not mention any discussion on reducing the rates even though policymakers penciled in a median three rate cuts for 2024 in their quarterly projections.

U.S. inflation has been coming down gradually, having peaked above 9% in mid-2022 and since tumbling to around 3%. This has underpinned the Fed's dovish tilt and raised hopes of a soft landing for the economy. Still, there are fears that the disinflation trend could stall, particularly if tensions in the Middle East escalate and raise the risk of another round of crippling supply disruptions.