FOMC minutes indicate that a “mild” recession is likely in 2023; Bitcoin price stays put at $30,500

• The minutes from the June 13-14 meeting of the Federal Open Market Committee suggested inflation is expected to fall back to 2% – but not until 2025.
• Almost all of the officials of the Committee, in their projection, noted additional rate increases would be appropriate in 2023. 
• Bitcoin price, along with the rest of the market, did not react significantly with the digital asset trading at $30,560. 

The Federal Open Market Committee (FOMC), during their last meeting on June 13-14, decided to pause hiking rates after ten consecutive raises. The decision was taken partly out of concern for tightening credit conditions and to wait and see the effect of past policy measures.  Despite the pause, the minutes show most members foresee the need for at least one more rate hike before the Fed is ‘done’

As far as the Big Crypto goes, the release only caused a slight uptick in BTC price, which continues to churn at around the $30,500 level. 

Some of the highlights from the FOMC minutes:-

• Almost all members of the Committee favored holding the rates steady at the June meeting.
• All bar two of the 18 officials noted in the Summary of Economic Projections (SEP) that additional rate increases would be appropriate in 2023.
• Staff still see a mild recession later this year, followed by a moderately paced recovery.

During the meeting, the FOMC also discussed inflation and stated,

“Reflecting the effects of the easing in resource utilization over the projection, core inflation was forecast to slow through next year but remain moderately above 2 percent. In 2025, both total and core PCE price inflation were expected to be close to 2 percent.

The recent meeting of the FOMC made headlines after the Federal Reserve hit the pause button on ongoing rate hikes. The month of June was the first to notice no increase in interest rates after ten consecutive rate hikes in the span of 15 months. 

The Fed was seeking to achieve maximum employment and inflation at a rate of 2% over the longer run. In order to make this happen, the Fed refrained from increasing the interest rate stating,

“In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5 to 5-1/4 percent. Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy.

However, in subsequent speeches, Federal Reserve Chair Jerome Powell noted that two more rate hikes are likely necessary this year. These hikes would allow the central bank to bring the inflation rate down to the current 2% target.

At the time of writing, the CME FedWatch tool is suggesting an 88.7% chance of the Fed raising interest rates by 25 basis points (bps) during the next meeting set to be held on July 26. This probability has only been increasing since the last meeting, and over the past week, the possibility has risen by 7%.

Rate hike probability

Thus the next meeting could very possibly result in the target rate rising to 5.25% - 5.50%. Naturally, this will also impact Bitcoin price, which has been rather well for the past few weeks.

Bitcoin price notes a neutral reaction

Following the release of the FOMC minutes, Bitcoin price observed a 0.11% rise. The cryptocurrency could be seen trading at $30,560 at the time of writing, keeping above the $30,000 mark. 

BTC/USD 1-day chart

Altcoins did not observe much change either, with Ethereum price standing at $1,912. XRP price remained unchanged in the last hour, bringing the altcoin to trade at $0.476. Similarly, Cardano price also did not observe the change in the market price trading at $0.284.