- During the June meeting, FED officials acted less in unison than suggested by the unanimous decision and adhered to the decision to keep interest rates unchanged.
- According to the minutes of the June 13-14 meeting, “almost all participants judged that maintaining the target range for the federal funds rate at 5% to 5.25% would be appropriate or acceptable.”
- Officials expressed expectations for further interest rate increases in 2023 and indicated that a rate hike in September could be appropriate.
The FED FOMC meeting minutes, eagerly awaited by Bitcoin and cryptocurrency investors, have been released, with officials anticipating further interest rate increases.
FED Minutes Released
The Federal Reserve’s (FED) FOMC meeting minutes have been published. During the June meeting, FED officials acted less in unison than suggested by the unanimous decision and adhered to the decision to keep interest rates unchanged.
According to the minutes of the June 13-14 meeting, “almost all participants judged that maintaining the target range for the federal funds rate at 5% to 5.25% would be appropriate or acceptable.” Some participants indicated a preference for a 25 basis point increase in the target range for the federal funds rate at this meeting or expressed support for such a proposal.
Additionally, officials expressed expectations for further interest rate increases in 2023 and indicated that a rate hike in September could be appropriate.
The minutes shed light on how challenging it is for policymakers to make decisions. While not changing interest rates, nearly all officials said that additional increases would likely be appropriate, and most emphasized that post-meeting communication would be necessary to convey this message.
Officials noted that there had been a rapid rise in interest rates since the beginning of 2022, leaving room to assess how this tightening had affected the economy. They were also monitoring signs of economic bouncebacks from the turbulence in the banking sector in March.
Last month’s decision by the FED marked the latest slowdown in policy following a year of the fastest rate increases in 40 years, including four consecutive 75 basis point increases. They began tapering the pace in December and made quarter-point increases at each of the first three meetings this year.
The meeting surprised some Fed watchers and investors trying to understand the central bank’s path, but since then, Chairman Jerome Powell has stressed in several public speeches that a majority of his colleagues on the Federal Open Market Committee support further interest rate increases.
Comments from Fed Chair Powell
Powell said last week at a conference organized by the Bank of Spain, “A large majority of Committee participants expect it to be appropriate to raise the target range for the federal funds rate by two or more increases by year-end.” He added, “Inflation pressures remain high, and the process of returning inflation to 2% has a long way to go.”
The personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of inflation, fell in May, while underlying measures suggested that what lay beneath the headline might be slowing. PCE food and energy increased at an annualized rate of 4.6% in May and changed little since December.
A divide has emerged among officials who had been acting almost unanimously earlier in the year. Some officials argue that slowdowns in general price indexes suggest deflationary pressures, while others say that inert core measures reflect deep-seated imbalances requiring correction.
While most officials noted the U.S. economy’s overall resilience as a positive feature in preventing a recession, concerns also arose about how long it would take for certain factors, such as a persistently strong labor market, to bring inflation down to the 2% target.
Recession Predictions
Economic projections prepared for the June meeting indicated that theimpact of expected further tightening on bank lending conditions, already tight financial conditions, would cause a mild recession to start from later this year, followed by a moderate-paced recovery.
However, according to information in the minutes, due to ongoing strong labor market conditions and the durability of consumer spending, the staff saw the likelihood of the economy continuing to grow at a moderate pace and avoiding a downturn as only modestly lower than the likelihood of a mild recession based on the weak recession scenario.
Officials will receive two important economic reports ahead of the FOMC meeting on July 25-26: the June employment report on Friday and consumer price data for the same month on July 12.
Bitcoin Price Remains Stable
The FED minutes, eagerly anticipated by the crypto community, did not create the expected volatility in Bitcoin. Typically, such developments lead to volatile movements in BTC price, but at the time of the minutes’ release, Bitcoin saw a modest 0.22% increase, touching $30,591.
At the time of writing, the Bitcoin price is trading around $30,480 levels. Starting the day near $31,000, Bitcoin experienced a slight dip, testing $30,200, but it has remained relatively stable around the $30,000 mark.
