According to minutes published on Wednesday, the Federal Reserve is expected to hike interest rates again, given that the US regulatory body’s early measures have failed to stop inflation.
The Federal Reserve decided during a July meeting that rates would increase by 0.5% in September, according to the minutes. Traders of cryptocurrencies have been keenly observing the Federal Reserve’s actions this year due to market volatility.
The minutes stated, “The projection for U.S. economic activity planned by the staff for the July Conference of the parties was significantly weaker than the June forecast, reflecting the economy’s diminished momentum and current and anticipated financial conditions that were expected to provide less support for aggregate demand growth.”
At the committee’s policy meeting on July 26-27, central bankers voted to increase interest rates by another 75 basis points, a move that Fed Chair Jerome Powell earlier described as “unusually substantial.”
Cryptocurrency and equity markets returned after July CPI data that was cooler than anticipated, although the Fed’s favoured gauge of inflation, the Personal Consumption Expenditures price index, will not be revealed until later this month.
The majority of market participants seemed to anticipate a lowering of inflation and slower but still solid economic growth in the near future, according to the minutes. “However, investors looked to be paying more attention to negative risks to the economy in light of the possibility of shocks from overseas and inflation’s ongoing upside surprises.”
“Technical research indicates that bitcoin faces a crucial test in the next days, as the 200 weekly moving average lies just below the current price of $23,700, at roughly $23,000 – failure to maintain this level would predict additional downside in the coming weeks and the market’s turnaround may be delayed,” said GlobalBlock analyst Marcus Sotiriou.