FOMC Minutes Signal Broad Support for Fed Rate Hike if Inflation Persists

The April FOMC minutes indicate that most Fed officials are likely to support a rate hike if inflation continues to trend upward due to the U.S.-Iran war. Furthermore, another rate cut is unlikely anytime soon, with the officials noting the uncertainty that the Iran war has caused.

FOMC Minutes Show Most Fed Officials Could Support Rate Hike

According to the April Fed minutes, the majority of the participants said that some policy firming would likely become appropriate if inflation were to continue to run persistently above their 2% target. To prepare for the possibility of this rate hike, many participants indicated that they would have preferred to remove the easing bias from the post-meeting statement.

As CoinGape reported, the Fed had left interest rates unchanged at the April FOMC meeting. Notably, Fed Presidents Beth Hammack, Neel Kashkari, and Lorie Logan supported the decision to hold rates steady but did not support including an easing bias.

Meanwhile, the FOMC minutes also showed that participants agreed that the continued elevated inflation readings, alongside uncertainty about the duration of the U.S.-Iran war and its economic implications, mean they may have to hold rates longer than previously anticipated.

However, several participants noted that it would likely be appropriate to lower rates once there are clear indications that disinflation is back on track, or if signs of greater weakness in the labor market emerge. The Fed had lowered rates three times last year to curb the weakness in the labor market.

As highlighted in the FOMC minutes, the war in Iran is raising inflation concerns, with energy prices rising to new highs and sending U.S. inflation higher. CoinGape reported that PPI inflation rose by 6% year-over-year (YoY) in April, the highest increase since 2022.

32% Chance Of A Hike This Year

Polymarket data shows a 32% chance of a Fed rate hike this year, while there is a 70% chance that the Fed won’t make any cuts this year. For now, market participants expect the Fed to keep holding rates steady, opting against a hike.

Former Fed Chair Jerome Powell indicated that a hike isn’t yet the base case for any Fed official, though he suggested that a prolonged war in Iran could change the outlook. Meanwhile, the Bitcoin price remained unchanged following the release of the FOMC minutes.

BTC is currently trading at around $77,400, up on the day, according to TradingView data. The leading crypto climbed earlier today after U.S. President Donald Trump said negotiations with Iran were in the final stages.