The Federal Reserve drops bombshell news late at night; monetary policy may face a significant turn!
The latest minutes from the Federal Reserve's meeting have exploded in the crypto world, and the matters discussed are no small issues.
Inflation has remained persistently high, and with the policies implemented since Trump's presidency, the impact on inflation remains an unknown.
Thus, the big shots at the Federal Reserve have decided that they won't need to rush into interest rate cuts over the next few months. They believe that the current interest rates are nearing a point where they can take a breather, and if they cut too aggressively, inflation may very well come roaring back.
However, there is an alternative voice within the Federal Reserve, a guy named Waller. He doesn’t see it that way; back on January 8, he jumped out to say that inflation will continue to decline, steadily moving towards the 2% target.
He also strongly supports further interest rate cuts this year, arguing that the U.S. economy is currently very stable, the job market is thriving, and that tariffs have little significant impact on inflation and monetary policy.
But from the meeting minutes, it appears that most officials did not buy Waller's perspective; they feel that the current interest rate is about right and should be eased gradually.
They also revealed that while inflation will slowly approach 2%, this process may take much longer than originally thought, and the momentum against inflation may have already cooled off.
What’s more concerning is that many officials believe the risks of rising inflation are increasing. For example, recent inflation data has been shockingly high, trade and immigration policies are changing rapidly, geopolitical issues are chaotic, financial conditions are extremely loose, household spending is robust, and housing prices are skyrocketing.
In terms of employment, while the job market is still expected to be quite stable, the big shots at the Federal Reserve must keep a close eye on changes in the labor market, fearing any potential mishaps.
Moreover, when the Federal Reserve cut interest rates by 25 basis points last month, some officials voiced their opposition. This indicates significant internal disagreement within the Federal Reserve on the issue of interest rate cuts.
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