Members of the FOMC – the Fed’s policy-making body continue to send “hawkish” messages, warning that it is too early to declare “inflation victory”.
In the early morning of February 23 (Vietnam time), the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) released the minutes of the meeting from January 31 to February 1. Accordingly, Fed officials have pointed out that although inflation has cooled, it has not been enough to stop them from raising the standard rate.
The minutes stated:
“Most participants find that reducing the pace of rate hikes at this point would lead to better risk management. And they need more evidence to be sure that inflation tends to decrease sustainably.“
According to the minutes of the meeting, inflation remained well above the Fed’s 2% target, the labor market remained strong, leading to pressure on prices and wages. Therefore, monetary policymakers of this central bank (central bank) agreed to continue the fight against inflation with interest rate hikes.
January economic data shows that inflation is cooling from its peak in the summer of 2022 but is still increasing. CPI rose 0.5% in December and up 6.4% over the same period last year. Meanwhile, PPI increased by 0.7% and 6% respectively. On the other hand, the labor market is still “heating up”, showing that the Fed’s interest rate hike has affected the real estate market and some other sensitive sectors, but has not affected most of the economy. economic.
Minutes of the Fed meeting also showed that the majority of participants in the meeting agreed on a 0.25 percentage point rate hike each, with only a few in favor of a 0.5 percentage point increase.
On the other hand, some worry that the easing policy of the past few months will hardly help the Fed meet its 2% target. David Wilcox, a Bloomberg reporter, discovered that the word “pause” was mentioned only once in the minutes. Therefore, it is likely that the central bank will keep the rate increase of 0.25% for both March and May. But markets are also concerned that if the Fed “goes too far,” the economy could fall back into recession.
Since the meeting, Fed President St. Louis – James Bullard and Cleveland Fed President – Loretta Mester, expressed their desire for the central bank to take more drastic action. In a recent interview with CNBC, Mr. Bullard reiterated his view that higher interest rates are more effective. But even if he favors a tough move in the short term, he thinks the peak of interest rates will be around 5.3%.
Previously, the Fed had left open the possibility of stopping raising interest rates in March, contributing to a sharp increase in US Treasury bond yields. The 10-year yield closed at 3.93%.
As for the crypto market, the price of Bitcoin (BTC) has not reacted as strongly as the Fed Chairman said on February 8. The king coin failed to continue its previous rally and fell more than 3% to $23,575 before the FOMC minutes were released. However, BTC price is currently recovering gradually to the area of 24,200 USD.