FOMC Meeting Minutes: Expectations and Market Reactions

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FOMC Minutes Signal Continued Rate Hikes

The Federal Open Market Committee (FOMC) convened on May 3-4, 2022, with the minutes from this meeting being highly anticipated by investors in Bitcoin and gold markets. These minutes have been scrutinized for any signs that the Federal Reserve (Fed) might adopt a more aggressive stance on monetary policy.

The minutes, released three weeks post-meeting, provide insights based on the economic conditions known to the Committee at that time. During this particular meeting, the FOMC decided on a 50 basis point rate hike. Fed Chairman Jerome Powell emphasized their commitment to combating inflation while also ensuring minimal disruption to economic stability.

As anticipated, the minutes revealed that many Fed members supported additional rate hikes in June and July. They reiterated the ongoing risks of inflation and the necessity for decisive action. Notably, all members agreed on reducing the Fed’s balance sheet, an effort known as quantitative tightening (QT). The consensus was clear that monetary policy should be swiftly realigned to a neutral stance.

Gold and Bitcoin React Mildly to Expected FOMC Outcomes

Despite the outlined plans, there remains uncertainty regarding the trajectory of rate hikes in subsequent meetings. Chairman Powell had previously dismissed the idea of a 75 basis point increase, suggesting instead the likelihood of two more 50 basis point hikes.

Since the minutes were neither more hawkish nor dovish than expected, the cryptocurrency and gold markets showed minimal volatility. At the time of writing, spot gold prices were hovering around $1,850, a level they had reached earlier in the day, as per TradingView data. Meanwhile, Bitcoin, the leading cryptocurrency, maintained its position above $30,000, trading at $29,635 with a 1.10% increase over the last two hours, according to CoinMarketCap data.