Crypto News: Top 5 Key Takeaways to Expect from Upcoming FOMC Minutes of Meeting

Crypto markets are bracing themselves ahead of the release of the Fed’s minutes of the meeting for January. Next week, the  Federal Open Market Committee (FOMC) is set to release the minutes of the meeting for its January meeting alongside a few Fed officials scheduled to speak at various forums. Here is what investors will gauge in the commentary next week:

1. Commentary on inflation

The US PPI inflation data released by the Bureau of Labor Statistics showed that wholesale inflation experienced a resurgence in January. The Producer Price Index for final demand increased by 0.3% in January, seasonally adjusted, as compared to the market expectation of 0.1%. Core PPI inflation rose 0.9 percent for the 12 months ended January 2024, showing a slower-than-expected recovery.

On the other hand, the U.S. Bureau of Labor Statistics announced the consumer price index (CPI) inflation data for January showing that inflation came in at 3.1%. The number was lower than the December inflation print of 3.4% but was still higher than overall market estimates of 2.9%.

After both the data points indicate the key inflation in the country hasn’t come down, investors are now early trying to understand how the Fed is perceiving this data. Therefore any commentary around inflation next week will be key.

2. Future of rate cuts

An important tool that investors use to evaluate investments has always been the Federal Reserve’s rate decisions. The devaluation of government securities caused by lower interest rates often makes assets like crypto more appealing. At present, the two data points have shifted expectations of a rate cut by the US Fed to July from an earlier expectation of June. Market participants are highly anticipating a rate cut to happen soon. The ease in economic conditions will bolster investment decisions and also see investors going for riskier assets.

Any indication from the Fed around the future trajectory of the rate decisions is highly important and therefore sought-after in the next week.

3. Market Outlook

The FOMC revised its long-term estimates for U.S. economic growth in December, indicating that the first half of 2024 may see a sharp slowdown in growth. At present, the FOMC projects full-year GDP growth of just 1.4% in 2024 and 1.8% in 2025. Any change to this prediction or the market outlook could potentially alter investor sentiments and will result in a change in consideration of financial assets as well.

4. US economy: Still resilient?

With strong data points time and again hinting that inflation in the US is not coming down, many investors are now wondering if the US economy is going to be resilient for a long. If the inflation rate does not come down to around 2%, which is what the Fed has projected, the chances of a rate cut happening soon are low. Therefore, next week’s minutes of the meeting alongside the speeches for many Fed officials are due to shed light on how the Fed is perceiving the US economy.

5. Mention for crypto or anything related to digital assets

The US Fed has so far not mentioned anything directly about crypto markets. It is highly unlikely that the minutes of the meeting that will be released next week will have anything about digital assets or direct mention of crypto markets. However, as many officials are due to speak on various forums, gauging the mention of the virtual asset realm in their speeches will be key for many investors. In case, any Fed official does mention anything about cryptocurrencies, it will give a clear picture of what government officials are thinking about the crypto markets.