The Most Important Statement From The Federal Reserve Meet

The Federal Reserve released the minutes of the September FOMC meeting. The Federal Open Market Committee is responsible for the monetary policy-making of the US. In a chilling statement, the Fed states that the cost of doing too little to fight inflation outweighs the cost of doing too much.

Why The Fed Will Remain Hawkish

The crypto market is dependent on macroeconomic factors. Moreover, the Federal Reserve’s hawkish stance is impacting the crypto market more than anything else. The Fed is engaging in interest rate hikes and quantitative tightening to curb soaring inflation levels. The central bank decided on four consecutive interest rate hikes of 75 bps. Key fed officials have made it clear that the bank is not yet done with its restrictive monetary policy.

The drawback of the fed’s hawkish stance is the global economic slowdown. The World Bank claims that the global economy will suffer from a recession in 2023. Similarly, the UN asked central banks to pivot from their hawkish stance to prevent an impending recession. Moreover, JP Morgan CEO Jamie Dimon stated yesterday that the economy will face a recession in 6-9 months.

Moreover, Elon Musk of Tesla and Cathie Wood of Ark Invests state that the US economy is on the verge of deflation. Deflation is a period when the prices of commodities and services go down. Many experts also believe that the economy is staring stagflation. Stagflation is possibly the worst possible outcome of the Fed’s stance.

While some market participants hoped that the Fed may pivot due to the threats to global financial instability, the Fed clearly believes that it will prefer overdoing its restrictive policy-making than pivoting too early.

Shift In The Tone Of Federal Reserve Meet

Despite the continuance of the Fed’s hawkish stance, some experts are noting the slight shift in the Fed’s tone. Kathy Jones of Schwab Centre For Policy Research claims that even the small reference to recalibrate the monetary policy is significant. She also claims that the Fed did acknowledge the potential spillover from its restrictive stance.