The minutes of the FOMC meeting, which Bitcoin and crypto money investors watched closely, were finally shared with the investors. Here is the information:
- Members lowered target ranges for interest rates in the wake of the bank crisis.
- FED officials predicted a 'mild recession' to begin in late 2023.
- Participants at the FED's March 21-22 meeting did not change their interest rate forecasts compared to December, despite the problems in the banking sector.
- At the FOMC meeting in March, all FED officials supported a 25 basis point rate hike.
- Participants agree that the banking system is robust and resilient.
- Participants expressed their concerns that developments in the banking sector could lead to tighter credit conditions, putting pressure on operations, hiring and inflation. However, these participants noted that the steps they took helped to calm the situation and reduce near-term risks so they could decide that an increase was appropriate.
- Some Fed members stressed the need for policy flexibility.
- Some participants stated that they discussed whether it would be appropriate to keep interest rates constant at this meeting.
Following the publication of the minutes, Bitcoin's reaction was as follows:
FED Raised 25 Base Points in the Last Meeting
Fed Chairman Jerome Powell told reporters after the meeting that he was considering a pause in interest rate hikes, but that policymakers had ultimately decided that they could respond to different problems with different tools.
The CPI data announced today seems to keep the FED's motivation to fight inflation intact. While overall prices rose only 0.1% month-on-month compared to 0.4% in February and 5% year-on-year, compared to 6% in the previous month, "core" goods and services inflation remained strong.
On Tuesday, Fed officials outlined the debate that emerged ahead of its policy meeting on May 2-3.
Three Fed regional bank leaders, including New York Fed Chairman John Williams, who is a permanent member and vice chairman of the Federal Open Market Committee (FOMC), which sets the central bank's interest rates, pointed out that inflation and at least one more rate hike would be needed.
A fourth name, Chicago FED Chairman Austan Goolsbee, displayed a more skeptical attitude and recommended that interest rate hikes should be evaluated patiently.
The Fed is expected to raise interest rates another 25 basis points next month, but policymakers also said they're watching banking data closely for signs of stress or a larger-than-expected decline in loans.
Prior to the SVB's bankruptcy on March 10, Powell had said that high inflation would require a half-point increase.
Citi analysts wrote that the smaller increase, approved at the March meeting, "shows that the Fed is taking the situation seriously, but also that the situation is not dire enough to prevent the Fed from following the tightening that it had signaled earlier." The minutes would "probably express confidence in the separability of price stability and financial stability," he added.
*Not investment advice.
