Fed’s Meeting Minutes & Their Impact on Bitcoin & Markets

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• In its November meeting, the Fed kept the interest rate stable between 5.25 and 5.5 after the last hike in July.
• Although the minutes to be released later today are likely to follow a similar line, they may not trigger a reaction from financial markets.
• The Department of Labor’s employment report released on November 3 showed a slowdown in job creation in October, dropping from 297,000 in September to 150,000.

FED’s meeting minutes will be published today: How will it affect Bitcoin and markets? Opinions of expert analysts on the subject!

FOMC Meeting Minutes to be Released Today

The minutes of the Federal Reserve’s November meeting will be a closely watched record that may provide clues about the direction of monetary policy and potential effects on the economy and markets. It will be disclosed to the public at 19:00 UTC.

In the November 1 meeting, after the last interest rate hike in July, the Fed kept the interest rate stable between 5.25 and 5.5. In the press conference held after the meeting, Chairman Jerome Powell stated that the ongoing strength in the labor market and consumer spending could necessitate liquidity tightening, creating a negative expectation for risk assets like cryptocurrencies.

Although the minutes to be released later today are likely to follow a similar line, they may not trigger a reaction from financial markets. The reason for this is the weak U.S. economic data announced since the meeting, which has strengthened expectations that the central bank has completed the interest rate hike process. In other words, the November meeting minutes may simply be updated.

As noted by ING analysts in a customer note on November 17, the release of the minutes “may cause less market movement than usual, given the softness of the data after the meeting.” Analysts also stated, “We have already heard statements from several Fed officials expressing satisfaction with the direction of the numbers, but indicating that they want to see more to be sure that inflation is on the path to 2%.”

The Department of Labor’s employment report released on November 3 showed a slowdown in job creation in October, dropping from 297,000 in September to 150,000. While the unemployment rate rose to 3.9%, softening in average hourly earnings, which measures average hourly earnings, continues to signal ongoing low inflation.

Data released last week showed that the U.S. Consumer Price Index increased by a slower-than-expected 3.2% year-over-year in October, below the 3.7% increase in September. Since that date, according to Fed fund futures, traders have moved expectations for interest rate cuts to May. Bitcoin is known to closely align with changes in fiat liquidity conditions.

Observations from Citi Analysts

Some observers, including Citi, note that while the November meeting minutes are historical, attention should be paid to comments about recent easing in financial conditions or the availability of financing in the economy. Tighter financial conditions affect households’ and firms’ saving and investment plans and pressure economic growth and risk assets. Easy conditions have the opposite effect.

Citi analysts said in a note on November 19, “The minutes of the November FOMC meeting could be the most revealing about Fed officials’ attitudes toward financial conditions.” and added: “In October, Chairman Powell and his colleagues argued that higher 10-year Treasury yields would replace further policy rate hikes. However, as financial conditions eased, the response was symmetric, and there was little resistance to lower interest rates and higher stock prices.”

Analysts added, “The minutes, which may include some hawkish hints suggesting that post-meeting conditions should be tight, may include some clues that officials believe conditions should remain tight for a longer time to lower inflation,” and suggested that the market response might be limited.

Credit Agricole U.S. economist Nicholas Van Ness also expressed a similar view: “A slight easing of financial conditions after the meeting could elicit a market response against the almost 100 basis points of easing expectations for 2024 from Fed speakers.