Fed FOMC meeting minutes are dovish: rate cut is possible in September
The Fed recently held a meeting to discuss interest rates. They felt that although interest rates are high now, rising inflation and unemployment may require them to adjust slightly. Several officials even felt that a 25 basis point rate cut was reasonable now, or they could have supported the decision.
However, most members still feel that if the data continues to meet expectations, they may have to consider easing policy at the next meeting. Fed Chairman Powell also said that they hope everyone can have more confidence that inflation can reach the 2% target before cutting interest rates.
The minutes also mentioned that the risks to the employment target have increased, while the risks to the inflation target have decreased. Some members are concerned that if the labor market continues to relax, it may get worse. This suggests that the Fed may start to pay attention to the risks in the labor market.
The Fed may need to speed up the pace of rate cuts to ensure a smooth landing for the U.S. economy. Priya Misra of JPMorgan Chase said that if risks in the labor market are really increasing, the Fed should speed up rate cuts by 50 basis points each time until it returns to a neutral zone, and then slowly adjust.
Futures markets are pricing in an easing of around 100 basis points in interest rates for the rest of the year. This is good news for the cryptocurrency market, as risk assets tend to do well in a low-interest rate environment.
However, despite the cryptocurrency market's gains due to the Fed's dovish outlook, there is some negative news in the market that may curb the buying rush. Some members of the crypto community are optimistic about the recent rise, believing that it could be a return to the bull market, especially if the Fed does cut interest rates in September.
In the U.S. stock market, after falling in midday trading, the major indices rebounded and moved higher after the release of the FOMC minutes, with the S&P 500 and Nasdaq 500 rising 0.42% and 0.57% respectively at the close, while the Dow Jones fell sharply before the close and finally closed flat.
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