Crypto Market Goes Green On FOMC Minutes

The FOMC minutes' release caused Bitcoin and Ethereum to trade slightly higher, indicating strength in the overall crypto market.

The minutes from the Federal Reserve's most recent policy meeting released on Wednesday shed more light on the depth of the debate taking place at the American central bank about how much higher interest rates may need to go in order to control inflation and slow down an economy that has outperformed expectations despite monetary tightening.

Highlights from the minutes of the FOMC

Almost all Federal Reserve officials present at the most recent meeting supported a raise of 25 basis points (bps), according to the minutes that were made public, with the exception of a few who preferred or might have supported a hike of 50 basis points (bps). Nearly all participants noticed and concurred that effective risk management would be made possible by decreasing the rate of rate increases at this point.

It's vital to note that several participants shared the belief that there was a heightened likelihood of a recession in 2023 and reserved their opinions on higher jobless claims. However, the topic of recession was apparently dismissed after the most recent report on nonfarm payrolls from the Bureau of Labor Statistics, which revealed that the United States had added 517,000 jobs for the month of January.

Participants acknowledged that the Federal Open Market Committee had made significant progress over the past year towards moving towards an appropriately restrictive posture of monetary policy, according to the official minutes that were provided by the Fed.

The proposal to reduce the amount of the Federal Reserve's security holdings, as stated in the paper titled "Plans for Lowering the Size of the Federal Reserve's Balance Sheet," which was published some time earlier, was viewed as necessary by all the participants. The minutes revealed that Fed officials were still concerned about the possibility of having to take additional measures to keep inflation low. This hawkish stance may become more apparent when officials release updated interest rate and economic projections at a meeting scheduled for four weeks from now.

The Federal Reserve will announce its most recent interest rate decision on March 22. The Federal Reserve is anticipated to hold its following meeting in the month of March. Investors are expected to pay close attention to data on unemployment claims and inflation until then.

The Federal Reserve chose to return to a more regular rate-hike size at the conclusion of the meeting that took place on January 31 and February 1 after a year of consecutive rate raises of 75 basis points and half a percentage point. The Federal Reserve increased its overnight interest rate by 0.25 percentage points.

Market Response to the FOMC Minutes

The cryptocurrency market was slightly more positive at the time of writing, with Bitcoin (BTC) price trading at 24,182, up 0.41% over the previous hour. On the other side, the cost of Ethereum has merely increased by 0.30% to $1,643.

The Federal Reserve's most recent meeting's minutes, which revealed that policymakers supported a peak in the federal funds rate this year, caused the stock market to experience a tumultuous day. The Dow Jones Industrial Average did not considerably change from its prior position and was mostly flat. The Nasdaq Composite only saw a rise of 0.3%, compared to the S&P 500's gain of 0.1%.