Tomorrow early morning (Beijing time, October 8 at 02:00), the Federal Reserve will release the minutes of its September 15–16 FOMC meeting. The value of these minutes isn’t in “what new numbers they reveal,” but in laying out the reasoning behind September’s rate hike (+25 bps to 3.75%–4.00%, the first hike since 2023, approved unanimously by all 12 members): why the Fed acted while inflation was still far above its 2% target, and whether it will make another move at its October 28 meeting.
First, let’s lay out what we already know. The dot plot released alongside the September meeting had already shifted the projected path higher: the median federal funds rate projection for the end of 2026 rose to 4.1% from 3.8% in June, implying “another 25 bps hike” from the current range. The core PCE forecast was also revised up to 3.4%. These figures show that policymakers assume inflation will prove stickier than expected, and that another hike later this year is likely.
So the minutes aren’t about the rate level itself, but three things about the Fed’s “reaction function”:
First, how the hike is characterized—is it “one-off insurance” or “the start of a sustained tightening cycle”? The tougher the language on persistent inflation in the minutes, the more fully a late-October hike will be priced in. Second, disagreement: all 12 members voted in favor, but we need to see whether anyone advocated for a larger increase or left the door open to concerns about overtightening. Third, the Fed’s tolerance for “higher for longer” rates, which directly determines the direction of the dollar and Treasury yields.
The transmission chain remains the same: hawkish minutes → expectations of a rate hike build → the dollar strengthens and Treasury yields remain elevated → dollar liquidity tightens → interest-free risk assets like $BTC get drained of liquidity; dovish minutes → the dollar gets some breathing room → risk appetite returns, creating a tailwind for crypto.
In short: these minutes will determine whether “the liquidity-draining pump” at the end of October keeps tightening or eases off a little. Risk appetite for $BTC moves inversely to dollar liquidity. Don’t underestimate the minutes—they can often set the direction more than the decision itself.
#BTC #Crypto
First, let’s lay out what we already know. The dot plot released alongside the September meeting had already shifted the projected path higher: the median federal funds rate projection for the end of 2026 rose to 4.1% from 3.8% in June, implying “another 25 bps hike” from the current range. The core PCE forecast was also revised up to 3.4%. These figures show that policymakers assume inflation will prove stickier than expected, and that another hike later this year is likely.
So the minutes aren’t about the rate level itself, but three things about the Fed’s “reaction function”:
First, how the hike is characterized—is it “one-off insurance” or “the start of a sustained tightening cycle”? The tougher the language on persistent inflation in the minutes, the more fully a late-October hike will be priced in. Second, disagreement: all 12 members voted in favor, but we need to see whether anyone advocated for a larger increase or left the door open to concerns about overtightening. Third, the Fed’s tolerance for “higher for longer” rates, which directly determines the direction of the dollar and Treasury yields.
The transmission chain remains the same: hawkish minutes → expectations of a rate hike build → the dollar strengthens and Treasury yields remain elevated → dollar liquidity tightens → interest-free risk assets like $BTC get drained of liquidity; dovish minutes → the dollar gets some breathing room → risk appetite returns, creating a tailwind for crypto.
In short: these minutes will determine whether “the liquidity-draining pump” at the end of October keeps tightening or eases off a little. Risk appetite for $BTC moves inversely to dollar liquidity. Don’t underestimate the minutes—they can often set the direction more than the decision itself.
#BTC #Crypto