The minutes of the meeting dated November 1, which will provide important information about the direction of the FED's monetary policy and its potential impact on the economy and markets, may not have the expected impact on Bitcoin and other financial markets.
The minutes, which will be announced at 22:00, are likely to be seen as outdated due to the softening of economic data since the meeting and the resulting expectations that interest rates will be reduced again in 2024.
Analysts: “The Impact of FED Minutes Will Be Very Limited”
At its meeting on November 1, the FED kept the benchmark interest rate, which it last increased in July, in the range of 5.25% to 5.5%. FED Chairman Jerome Powell stated that the ongoing strength in the labor market and consumer spending may require further tightening of liquidity.
However, the minutes may not cause a significant reaction in financial markets. This is because weak US economic data has been released since the meeting, strengthening the belief that the central bank has completed interest rate hikes. As a result, the November meeting minutes may be viewed as outdated.
The release of the minutes “will likely result in less market movement than usual, given the softness in post-meeting data,” ING analysts wrote in a Nov. 17 client note. They added that many Fed officials have expressed satisfaction with the direction the numbers are going, but have said they want to see more to make sure inflation is on track to reach 2%.
As seen in FED futures, traders carried their interest rate cut expectations to May. Bitcoin is known to closely follow changes in fiat liquidity conditions.
“The minutes from the November FOMC meeting may be the most revealing information about Fed officials' attitude toward financial conditions,” Citi analysts wrote on Nov. 19.
*This is not investment advice.