The Federal Reserve has published “minutes”, i.e. a record of talks from the last meeting of the Federal Committee on Open Market Operations.
“The projection presented by analysts at the December FOMC meeting was not as weak as the one from a month ago,” the document said. The latest data suggest that real GDP growth in the second half of 2022 was stronger than previously predicted. At the same time, the forecast continues to show a clear slowdown in 2023 .
The members of the Committee agreed, however, that inflation is still well above the inflation target set by the Fed. However, they have noticed that product prices are falling. This is a positive forecast for the market.
What was said about easing monetary policy? FOMC members are very cautious about this issue. In their opinion, very responsible steps still need to be taken, strictly based on macroeconomic data.
The above means that at present we cannot count on lowering interest rates in the US. According to the FOMC report, none of the members of the Federal Open Market Operations Committee saw fit to vote for lowering interest rates.
What does this mean for the cryptocurrency market?
For the cryptocurrency market, this means that we will probably wait a few more months (or longer) for the bull market. This is because capital will start flowing back into the financial markets once the Fed decides to cut interest rates. or decides that the cycle of increases can be ended.
“With inflation still well above the Committee’s longer-run goal of 2 percent, participants agreed that inflation was unacceptably high,” the minutes said, adding that an “unwarranted easing in financial conditions” would “complicate the Committee’s effort to restore price stability.”
The FOMC minutes also mentioned the FTX exchange collapse but noted that it did not have a wide impact on the financial system.
“While the spillovers from this situation had been significant among other crypto lenders and exchanges, the collapse was not seen as posing broader market risks to the financial system,” the minutes read.