The latest minutes from the Federal Reserve’s monetary policy meeting show that all officials in attendance unanimously agreed to raise interest rates by 25 basis points. Most officials believed that, given the lack of recent progress in bringing inflation down and the growing upside risks to inflation, another rate hike may be needed this year. Several policymakers even stated plainly that the current policy stance was not yet sufficiently restrictive.
The minutes were more hawkish than markets had expected. The Fed not only raised its economic growth forecasts but also identified external factors, such as potential tariff increases, as key drivers of higher prices. This suggests that policymakers’ concerns about inflation flaring up again have significantly outweighed their concerns about a cooling labor market.
With the likely peak in interest rates potentially moving higher, macro-financial conditions will remain under pressure. Treasury yields and the U.S. dollar index are expected to find strong support, while the liquidity discount on global risk assets may persist for longer, limiting the scope for valuation recovery in traditional equities.
For crypto markets, the reality of higher rates for longer will directly weaken inflows of speculative capital. Risk assets, led by $BTC , may struggle to begin a sustained rebound in the near term as liquidity continues to drain. Investors should beware of the downside risk of further valuation declines.📉
#FOMC #FederalReserve #Inflation
The minutes were more hawkish than markets had expected. The Fed not only raised its economic growth forecasts but also identified external factors, such as potential tariff increases, as key drivers of higher prices. This suggests that policymakers’ concerns about inflation flaring up again have significantly outweighed their concerns about a cooling labor market.
With the likely peak in interest rates potentially moving higher, macro-financial conditions will remain under pressure. Treasury yields and the U.S. dollar index are expected to find strong support, while the liquidity discount on global risk assets may persist for longer, limiting the scope for valuation recovery in traditional equities.
For crypto markets, the reality of higher rates for longer will directly weaken inflows of speculative capital. Risk assets, led by $BTC , may struggle to begin a sustained rebound in the near term as liquidity continues to drain. Investors should beware of the downside risk of further valuation declines.📉
#FOMC #FederalReserve #Inflation