FOMC meeting minutes released; headwinds for the crypto market?

YEREVAN (CoinChapter.com) – The Federal Reserve released the minutes of its Federal Open Market Committee (FOMC) July meeting on Aug. 17, clarifying Chair Jerome Powell’s intentions for the current quarter.

The minutes indicated that the Fed is unlikely to vier from its hawkish interest rate hikes policy until inflation came down “substantially.”

FOMC meeting minutes

As a result, the policymakers approved a 0.75 percentage point rate hike. A possibility for future increases wasn’t off the table. However, the officials agreed they would “closely watch” the data before making that decision.

With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability.

read the meeting minutes.

The FOMC meeting minutes also concluded that the policymakers would take their foot off the growth break once they feel comfortable with the overall direction and their policy’s effect on the inflation rate.

Public perception important for policy

Meanwhile, the Committee also noted the importance of public perception of its actions, as the latter can materialize in real market changes.

Participants judged that a significant risk facing the Committee was that elevated inflation could become entrenched if the public began to question the Committee’s resolve to adjust the stance of policy sufficiently.

the minutes concluded.

The officials noted that if this risk materialized, it would “complicate” the objective of returning inflation to 2 percent and could “substantially raise” the economic costs of doing so. But, as expected, the markets were neutral until the minutes’ release.

Also read: China’s real estate implosion leads to ‘toxic nationalism’ divergence. 

Risk-on assets to tumble?

After the Fed underscored the importance of interest rate hikes, and its intention to proceed with another three-quarter of a point, the U.S. S&P 500 responded with a red candle.

Additionally, the cryptocurrency market adopted a bearish bias in the days preceding the FOMC meeting minutes release. It tumbled from $1.17 trillion on Aug. 14 to $1.09 trillion on Aug. 18, losing $80 billion in four days.

If the Federal Reserve goes through with additional interest rate hikes, the cryptocurrency market could tumble further, risking losing the Q3 gains.