The minutes of the meeting held by the FED on May 2-3 were published. Here are the key points:
- FED Minutes Show Officials Divided to Support Further Rate Increases
- FED: Authorities Deem Necessary to Increase Debt Limit on Time
- Nearly All Officials See Upward Risks in Inflation Outlook
- FED Officials Emphasize Data-Based Approach, No Rate Cuts Are Expected Based on New Information
- Some respondents expressed concern that the federal debt limit may not be increased in a timely manner, which could lead to significant disruptions in the financial system and tightening in financial conditions.
- Respondents generally agreed that it is becoming more uncertain to what extent further rate hikes might be appropriate.
- Respondents agree that inflation is unacceptably high and falling more slowly than expected.
- FED staff maintained their 'moderate' recession forecast for 2023.
- Participants stated that the stress in the banking sector may put pressure on economic activities, albeit to an uncertain extent.
Following the announcement of the minutes, the Bitcoin (BTC) price reacted as follows:
Why Are Fed Minutes Important?
FOMC minutes are the minutes of meetings of the Federal Open Market Committee (FOMC), the Fed's policy-making body. The FOMC minutes contain a summary of the information and discussions that led to the decisions, as well as the votes on the policy decisions taken at these meetings.
The minutes are important because they provide information about the economic and financial conditions affecting the Fed's monetary policy, as well as the rationale and expectations of FOMC members. FOMC minutes are published three weeks after the policy decision is made.
FOMC minutes are released weeks later rather than immediately because they provide more in-depth information on the process and rationale behind certain policy actions, such as the views of specific Fed members and deeper perspectives on the US economic picture and the overall Fed balance sheet. It takes more time to prepare and review than the statement released immediately after the meeting.
The delay also allows the Fed to promote transparency and accountability in monetary policy without causing too much volatility or confusion in the market.
*Not investment advice.