FOMC Minutes Signal Central Bank Divided on Need for More Tightening – Here is How Crypto Reacted
The minutes from this month’s FOMC meeting of US Federal Reserve policymakers were just released, revealing the bank to be divided on the need for further interest rate hikes.
Cryptocurrency, forex, US equity and US bond markets didn’t see much of a reaction to the minutes, the tone of which were broadly as expected.
In recent weeks, some Fed officials suggested they favor further tightening, whilst others, including Fed Chair Jerome Powell, have hinted they favor a pause in interest rate hikes.
The US central bank lifted interest rates by 25 bps to 5.0-5.25% earlier after its 2-3rd May meeting, a 10th consecutive rate hike that has seen US interest rates jump 5.0% in just 14 months.
The Fed started raising interest rates aggressively last March to dampen an unexpectedly prolonged surge in US price pressures, with this hawkish pivot tilting equity and crypto markets into an ugly bear market in 2022.
“Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary,” the minutes published on Wednesday stated.
“Some participants commented that, based on their expectations that progress in returning inflation to 2% could continue to be unacceptably slow, additional policy firming would likely be warranted at future meetings,” the meetings continued.
US interest rate future markets were last pricing about a 30% chance that the Fed hikes interest rates against at its 14th June meeting, unchanged from one day ago, according to the CME’s Fed Watch Tool.
But those expectations could quickly shift, and any such shift could have implications for the near-term outlook for crypto markets.
“Many participants focused on the need to retain
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