• The Federal Reserve has released the minutes of the FOMC meeting held on May 2-3.
  • Officials were split on support for more interest rate hikes.
  • Inflation was determined to be still “unacceptably high,” hence the prospects for a “mild recession” later this year.
  • As expected, the minutes did not excite a notable reaction from Bitcoin price.

The US Federal Reserve has released the minutes of the last Federal Open Market Committee (FOMC) meeting held on May 2-3, providing a summary and explanation of the previous interest rate hike and every member’s opinion. From the minutes, officials were split on support for more interest rate hikes.

Also Read: FOMC Minutes unlikely to provide much momentum for the Dollar – Commerzbank

Market participants were eager to see the Fed's stance on inflation, economic growth, and interest rates, as these will have a bearing on financial markets going forward.

FOMC Minutes show limited impact on Bitcoin

Federal Reserve officials raised interest rates by a quarter-point to a level of 5-5.5% during the central bank’s policy meeting on May 2-3. This happened despite debate over whether pausing tightening efforts would instead be the more advisable move. While the release, as is the norm, comes several weeks after each meeting, market participants were just as keen, looking for clues about how central bank officials are feeling, and with the hope of clear guidelines on where monetary policy is likely headed over the next several weeks or months.

Well, the results are out and the Fed officials are at an impasse, despite the general agreement that inflation was still “unacceptably high,” and they continue to see a “mild recession” later this year.

This throws off the CME Group FedWatch tool prediction that assigned a 75% chance of the Fed keeping rates unchanged in June.

From the reading, some of the more dovish FOMC members demonstrated an inclination toward rate pauses, cautioning that the reprisal from a series of bank collapses during spring would have a similar effect on financial conditions as rate hikes do. Such an outcome, in turn, would mean that the Fed did not have to raise rates as aggressively as it had once indicated. On the other hand, another cohort of members was hawkish, pushing for more rate hikes with hopes of curbing inflation.

Earlier, Fed Chairman Jerome Powell had dismissed the concerns with his announcement of a quarter-point increase, emphasizing that the banking system was sound, and articulating his view that the economy could avoid a recession.

Citing a comment from the FXStreet Insights Team,

25 bps more or less will not make much difference for the Dollar, something we have often pointed out. Instead, it is about how hawkish the Fed actually is.

In their opinion, provided the comments and data suggest that the Fed could deliver more or that the market’s rate cut expectations for the second half of the year are overly ambitious and might have to be adjusted, Bitcoin price is likely to head lower.

Bitcoin price and crypto market reaction to FOMC minutes

Markets were selling off hours before the release, possibly because of global inflation fears. However, as the FOMC minutes have not given direction, Bitcoin could continue its boring price action. This is expected, considering the king crypto failed to react significantly to the May 2-3 rate hike.

Nevertheless, if the FOMC moves toward a consideration of more interest rate hikes to come, traders should expect a dip in Bitcoin (BTC) price, potentially to tag the $25,000 level, or in the dire case, a leg down to the $24,000 level.

BTC/USDT 1-Day Chart

At the time of writing, Bitcoin price is $26,320, a daily drop of 3.35% as it eases towards the $25,000 support.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

US presidential election outcome could shape the future of crypto

US presidential election outcome could shape the future of crypto

US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).

More Cryptocurrencies News
Bitcoin Price Forecast: BTC recovers as Donald Trump takes lead on polls

Bitcoin Price Forecast: BTC recovers as Donald Trump takes lead on polls

Bitcoin (BTC) slightly recovered to around $68,800 on Tuesday, following a shift in the United States presidential race that saw former President Donald Trump regain the lead, after US spot Bitcoin ETFs experienced an outflow of over $540 million on Monday.

More Bitcoin News
Crypto markets brace for volatility in tight race between Trump and Harris

Crypto markets brace for volatility in tight race between Trump and Harris

The US presidential election is one of the most significant events in the world. Due to the influence of the country’s political decisions, policies, and economic approaches, it can significantly impact crypto and global markets. 

More Cryptocurrencies News
Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections

Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections

MAGA (TRUMP) trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption

More Cryptocurrencies News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP