Crypto Market Turns Green On Release Of FOMC Minutes; Interest Rates Remain A Concern

FOMC Minutes

On Wednesday, the Federal Reserve’s minutes from its most recent policy meeting provided greater insight into the depth of discussion at the American central bank regarding how much further interest rates may need to rise in order to curb inflation & cool down an economy that has outperformed forecasts despite monetary tightening.

Highlights From the FOMC Minutes

According to the minutes that were made public, almost all of the officials at the most recent meeting of the Federal Reserve supported a hike of 25 basis points (bps), with the exception of a few officials who favored or could have supported a hike of 50 basis points (bps). Almost all participants observed and agreed that slowing the pace of rate increases at the current juncture would allow for appropriate risk management.

It’s important to note that some participants held the opinion that there was a heightened possibility of a recession in 2023 and reserved their opinions on greater jobless claims. However, following the most recent report on nonfarm payrolls from the Bureau of Labor Statistics, –which stated that the United States has added 517,000 jobs for the month of January–the discussion regarding recession was reportedly dropped.

As per the official minutes released, the Fed was quoted as saying:

Participants concurred that the (Federal Open Market) Committee had made significant progress over the past year in moving toward a sufficiently restrictive stance of monetary policy

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All of the participants were of the opinion that it was necessary to keep moving forward with the plan to lessen the size of the Federal Reserve’s security holdings, which was outlined in the document titled “Plans for Reducing the Size of the Federal Reserve’s Balance Sheet,” released some time earlier. The minutes showed that Fed members were still alert to the risk that they may have to do more in order to keep inflation low, which is a hawkish bent that may come into more exact view when policymakers issue new interest rate and economic estimates at a meeting scheduled in four weeks.

The Federal Reserve is expected to hold its next meeting in the month of March, and on March 22 it will announce its most recent interest rate decision. Until then, investors are anticipated to focus their attention on statistics pertaining to inflation and jobless claims.

After a year of consecutive rate hikes of 75 basis points and half a percentage point, the Federal Reserve decided to return to a more standard rate-hike size at the conclusion of the meeting that took place on January 31 and February 1. The Fed raised its overnight interest rate by a quarter of a percentage point.

Market Reaction On FOMC Minutes

At the time of writing, the crypto market presented a slighter bullish momentum as Bitcoin’s (BTC) price traded at 23,800, representing a gain of 0.41% in the past one hour. Ethereum’s price, on the other hand, has seen a marginal increase of  0.30% at $1,630. At the time of writing, the total market capitalization of all cryptocurrencies has dropped by 2.92% from the previous day, placing it at $1.08 trillion.

However, it turned out to be a volatile day for the stock market as traders digested the minutes from the most recent meeting of the Federal Reserve — which showed that policymakers supported a peak in the federal funds rate this year. The Dow Jones Industrial Average was largely flat and did not significantly move from its previous level. The S&P 500 witnessed a gain of 0.1%, while the Nasdaq Composite recorded a mere gain of 0.3%.

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The post Crypto Market Turns Green On Release Of FOMC Minutes; Interest Rates Remain A Concern appeared first on CoinGape.

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Pratik Bhuyan