The Federal Reserve reaffirmed its decision to leave the target interest rate between 5% and 5.25% in a minutes document published on July 5.
The document provided new details about the outcome of the mid-June meeting. It emphasized the Fed’s commitment to bring the inflation rate back to 2%, a goal to which all members are strongly dedicated.
To lower interest rates, the Federal Reserve stated that it will consider the cumulative tightening of monetary policy, the delayed impact of policy on economic activity and inflation, and other developments. The Federal Open Market Committee (FOMC) also announced its intention to reduce the Federal Reserve’s holdings of Treasury securities, agency debt, and agency mortgage-backed securities.
While some of these outcomes were mentioned in previous reports, the latest minutes provided additional context by indicating that almost all participants found it appropriate or acceptable to maintain the target rate between 5% and 5.25%. While members voted unanimously to keep the interest rate at the current level, some participants expressed support for a 25 basis point increase in the federal funds rate or indicated that they could have supported such an increase. This was attributed to a tight labor market, momentum in economic activity, and few indications of a return to the Fed’s 2% target.
There Could Be Future Interest Rate Hikes
The latest minutes report also includes a survey conducted with market participants. The survey indicated that there would be no interest rate changes in early 2024, but participants expressed the possibility of “additional tightening in upcoming meetings.”
On average, participants estimated a 60% probability that the peak policy rate would be higher than the current target rate.
Separate reports from CNBC suggest that out of the 18 participants within the Federal Reserve, 16 of them expected the possibility of an additional interest rate hike this year.
Higher interest rates are generally believed to reduce investment in risk assets such as cryptocurrencies. However, the recent news has not had a significant impact on the cryptocurrency market, as Bitcoin (BTC) and other cryptocurrencies have only experienced a 1% decrease in the past 24 hours.