The Federal Reserve is having a bit of an identity crisis. Minutes from the January 27-28 FOMC meeting paint a picture of a central bank that can’t quite agree on what comes next, with a meaningful faction leaning toward keeping rates elevated, or even raising them, if inflation doesn’t cooperate.
For crypto markets, which have been riding the assumption that rate cuts are a matter of “when” rather than “if,” this is the kind of cold water that stings.
A committee at odds with itself
The split within the Fed is wider than many expected. According to the minutes, “several participants” said additional rate cuts could be appropriate if inflation continues trending toward the Fed’s target. That sounds dovish enough on its own.
But here’s the thing. A separate group, described as “some participants,” argued that rates should be held unchanged “for a period.” And then there’s the hawkish contingent, who went further still, suggesting that rate cuts may not be warranted at all until there is “clear evidence” that inflation moderation is genuinely back on track.
