Today, the United States Federal Reserve System (FED) released the meeting minutes between January 31, 2023 – February 1, 2023. Bitcoin and the wider crypto market remained relatively steady following today’s release, with BTC trading further below the $24,000 price at the time of writing.
The meeting saw FED Chair Jerome Powell hike interest rates by 25bps from the previous 50bps from last year. The minutes confirmed that only a few Fed officials supported a 50bps hike, with the majority going for 25bps.
Before the minute release, the crypto market had seen significant price downtrends, with Bitcoin barely holding the $24,000 mark. The market decline in the past 48 hours followed rumors of a higher price hike than the FED did in January.
The crypto market cap also plummeted by 3%, falling to $1.08 trillion from over $1.2 trillion. The market volume is also struggling to hold $63 billion, signaling a bearish market sentiment after the recent hike.
Inflation had shown signs of cooling off in December. Used car prices, medical care, and airline tickets significantly dropped. Inflation rose by 0.5%, and the CPI was up 6.4%. This has signaled to the Fed that more work needs to be done, as data shows inflation is not going as planned.
FED States Concern After Recent Inflation Data
The FED price hikes by a quarter in January resulted from positive signs from inflation data. However, recent inflation data has come in stronger than expected, signaling uncertainties. Recent jobs data released earlier in the month showed that inflation is still not where the FED expected it to be.
St. Louis Fed President, James Bullard, revealed that he and Cleveland Fed President Loretta Mester pushed for a 50bps hike in January. But the house settled for a 25bps hike in the previous meeting.
“It has become popular to say, ‘Let’s slow down and feel our way to where we need to be.” We still haven’t gotten to the point where the committee put the so-called terminal rate,” Bullard stated.
There have already been fears that a higher interest rate hike would put the economy into recession. This has sparked a selling spree amongst investors, leading to the recent market downtrend.
