The Federal Reserve provided new details about the outcome of its mid-June meeting in a minutes document released July 5.
Those minutes reaffirmed that the group aims to keep the federal funds rate — or target interest rate — at 5% and 5.25% for the foreseeable future.
The Fed also said it aims to bring inflation back to 2%, a goal that the latest release says all members are “strongly committed” to.
To cut interest rates, the Federal Reserve said it is taking into account the cumulative tightening of monetary policy, the policy’s lagged effect on economic activity and inflation, and other developments. It also said the Federal Open Market Committee (FOMC) will reduce the Federal Reserve’s holdings of Treasury bills and government debt and mortgage-backed securities held by the agency.
While some of those results were mentioned in earlier reports, the latest minutes provided additional context by noting that almost all participants felt it was “appropriate or acceptable” to leave the target rate at 5% to 5.25%.
Although members voted unanimously to leave interest rates at current levels, some participants favored a 25 basis point increase in the federal funds rate or said they could have supported such a hike. They supported this on a tight labor market, momentum in economic activity and little sign of a return to the Fed’s 2% target.
There may be future rate hikes
The last minutes report also describes a survey among market parties. It said median paths suggested no rate changes in early 2024, but said respondents saw a “clear opportunity for additional tightening in forthcoming meetings.”
Respondents also estimate an average chance of 60% that the peak policy rate will be higher than the current target rate.
Separate reports from CNBC suggest that within the Federal Reserve, 16 out of 18 participants expected one more increase could last this year.
It is generally believed that higher interest rates reduce investments in risky assets such as cryptocurrency. However, the latest news has not dramatically affected the cryptocurrency: Bitcoin (BTC) and the rest of the crypto market are down just 1% in 24 hours.
The message that the Fed decided not to hike rates at the FOMC meeting in June, but left room for future hikes, first appeared on CryptoSlate.