What The US’ Federal Open Market Committee meetings suggest a mild recession to come
In its minutes document released on July 5, the Federal Reserve Open Market Committee (FOMC) reaffirmed its commitment to keeping the federal funds rate between 5% and 5.25% in the near future. All members of the Fed expressed a strong commitment to bringing inflation back down to 2%. However, they anticipate a “mild recession” sometime in the year, which would be preceded by a “moderately paced recovery.” Amidst the development, Bitcoin price remains stable, holding above $30,500.
Key Points:
- The Federal Reserve plans to maintain a restrictive stance for monetary policy, guided by a data-dependent approach.
- After a streak of ten consecutive rate hikes, the Federal Reserve decided to pause its rate-hiking program in June.
- The CME FedWatch Tool predicts a 91.1% chance of a quarter-point rate hike in July, suggesting a target rate increase to 5.25%-5.50% at the next meeting.
- The Fed’s revised projections indicate a possibility of two additional quarter-point rate hikes in the remaining four sessions of 2023.
- Fed Chair Jerome Powell remains confident in achieving a “soft landing” and avoiding a severe economic slump.
Hot Take:
The Federal Open Market Committee’s meetings suggest a cautious approach to monetary policy, with a focus on combating inflation and preparing for a potential mild recession. While the Fed plans to maintain the federal funds rate within a specific range, the possibility of rate hikes in the future remains. The impact of these decisions on Bitcoin’s price also remains to be seen. Overall, the Federal Reserve’s actions indicate a willingness to adapt to changing economic conditions while aiming for stability.
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