Crypto prices fell gradually after minutes of a November Fed meeting showed an expected slowdown in rate hikes. Federal Reserve officials said the apex bank would likely resort to lower rate hikes after assessing the US fiscal landscape. Part of the minutes reads as follows:
A number of participants noted that as monetary policy moves closer to a stance tight enough to meet the committee’s goals, it would become appropriate to slow the rate of increase in the target range for the federal funds rate. .”
Furthermore, the document also states that an overwhelming majority of participants consider that a “slowing the pace of the rise would probably be appropriate soon.”
Cryptocurrency prices are temporarily recovering from the expiring rate hikes by the Fed.
The price level of the crypto market rose ahead of the release of Federal Open Market Committee (FOMC) minutes. This peak is explained by the expectation of a reduction in interest rate hikes by the US central bank as a result of the slowdown in inflation. While crypto asset prices rose, they returned to previous levels following the Fed’s rate hike update. When the news broke yesterday, bitcoin (BTC) was trading at $16,500, up about 5.5%. The total capitalization of the cryptocurrency market was $781 billion.
Cryptocurrency market watchers widely expected the FOMC to trim December’s gain to 0.5 percentage point. Such anticipation comes after the fiscal unity began four consecutive 0.75 percentage point increases throughout the year. At its November 1 and 2 meeting, the committee agreed that the Fed should taper its rate hikes. Some officials have also expressed concern about the impact that sharp and relentless rate hikes could have on the economy and financial stability.
Markets are wondering how far the Fed will go to successfully contain inflation
Market watchers were also looking for clues as to how far policymakers should go in 2023 to keep inflation under constant control. Observers expect some more rate hikes next year, followed by likely cuts as we approach 2023.
FOMC officials also said the public should focus on the likely path of the rates rather than the pace of further increases within the “target range“. However, as things stand, monetary policymakers also believe that the smaller planned increases allow for reviews ahead of the next December deliberations. These assessments include examining the impact of the rate hike sequence and the overall health of the economy to date.
While Fed officials share the general feeling that inflation may ease, they continue to urge caution. Last week, for example, James Bullard, chairman of the St. Louis Federal Reserve, said the central bank still had work to do to contain inflation. The FOMC voting member explained that the rate hikes had only a limited effect on inflation:
“So far, the change in monetary policy stance appears to have had only limited effects on perceived inflation, but market prices suggest that disinflation is expected in 2023.”
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