The Federal Reserve recently released the minutes of the Federal Open Market Committee (FOMC) meeting held on May 2-3 2023, shedding light on the central bank’s stance on monetary policy. Certain key points from the minutes paint an interesting picture for the United States economy and the broader financial markets.
Officials Split On Interest Price Hikes
Reports by the minutes, officials expressed divergent thoughts on the need for further interest price hikes. The economic forecast presented by the staff to the FOMC was indicative of the fact that tightening in bank credit conditions, along with existing financial constraints, would likely result in a mild fall followed by a moderate recovery thereafter in the year.
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According to expectations, the Federal Reserve raised key interest prices by 25 basis points to a range of 5.00 percent to 5.25 percent in May. Interestingly, participants in the meeting agreed on the soundness and resilience of the United States banking system. They did likewise express concerns that tighter credit conditions for households and enterprises could dampen economic activity, hiring, and markets. Nonetheless, the extent of these effects remained uncertain, reports by the minutes.
Concerns Over Growing Inflation
A number of participants expressed the belief that the progress made in bringing inflation back to the target price of 2 percent may be disappointingly slow. They suggested that additional policy measures could be necessary in future meetings. Nonetheless, others pointed out that if the economy continued to evolve as expected, further tightening after the present meeting can potentially not be required.
Furthermore, numerous officials emphasized the importance of raising the debt limit in a timely manner to avoid potential disruptions in the financial system and the broader economy. In summary, the minutes revealed a unanimous agreement between participants that inflation remained at an inappropriately high degree and with the labor market remaining tight, “upside dangers to the inflation outlook remained a key factor shaping the policy decisions”.
In the wake of this news, the price of Bitcoin (BTC) witnessed a marginal decline of 0.15 percent while Ethereum (ETH) on the other hand exhibited a similar loss of 0.18%. At the time of publication, Bitcoin (BTC) was exchanging hands at $26,247.55 with the larger cryptocurrency market standing at $1.10 Trillion, which represents a decrease of 2 percent in the previous day.