With the release of the FOMC minutes, Bitcoin and Ethereum traded marginally higher, signaling strength in the broader crypto market. However, the gold market remained in the red zone.
Highlights from the FOMC minutes
On Wednesday, the minutes of the Federal Reserve’s most recent policy meeting gave further insight into the depth of the debate at the U.S. central bank over how much further interest rates might need to be raised to contain inflation and cool an overperforming economy, despite monetary tightening.
According to the minutes released to the public, almost all officials supported a 25 basis point (bps) increase, except for a few officials who supported a 50 basis points (bps) rate hike at the Fed’s last meeting. Almost all participants observed and agreed that slowing the pace of rate hikes at the current node would allow for appropriate risk management. It’s important to note that some respondents hold the view that there is a higher probability of a recession in 2023 and are reserved about larger jobless claims. According to the official minutes released, the following words of the Fed were quoted:
Participants agree that the FOMC has made significant progress in moving towards a sufficiently restrictive stance on monetary policy in the past year.
Fed members still on guard against inflation risk
All of the respondents were of the view that it was necessary to continue the Federal Reserve’s plan to reduce the size of its securities holdings, outlined in the document entitled “Federal Reserve’s Plans to Resize its Balance Sheet.” The minutes showed that Fed members were still on the alert for the risk that they might have to do more to keep inflation low. It’s a hawkish trend that could become clearer when policymakers announce new interest rate and economic forecasts at a meeting scheduled in four weeks.
The Fed, which is expected to hold its next meeting in March, will announce its latest interest rate decision on March 22. Until then, investors are expected to focus their attention on statistics on inflation and unemployment claims. After increasing interest rates by 75 basis points and half a point for one year in a row, the Fed decided to return to a more standard rate hike size at the end of its meeting on January 31 and February 1. The overnight interest rate is a quarter point.
How has Bitcoin and gold reacted to the FOMC minutes?
The crypto market has shown slight bullish momentum at the time of this writing, with the price of Bitcoin (BTC) trading at 23,800 representing a 0.41% increase over the past hour. On the other hand, Ethereum’s price rose marginally by 0.30% to reach $1,630. At the time of this writing, the combined market capitalization of all cryptocurrencies reached $1.08 trillion, down 2.92% from the previous day.
However, as traders digested the minutes of the Federal Reserve’s latest meeting, the situation for gold was not so encouraging. Gold prices are trading near session lows as the minutes of the Federal Reserve’s February monetary policy meeting showed some members backing more aggressive action. At press time, the precious metal is changing hands at $1,824.7, down 0.55%.
