The Fed released the minutes of its latest meeting today, announcing that the US job market remained constrained in December, with the unemployment rate hitting a record low of 3.5% in December.
As expected, the Fed also said that the percentage change in the 12-month personal consumption expenditures (PCE) price index indicated that consumer price inflation fell in November and December. On a downward trend, inflation remained high at 5% in December, the minutes showed.
During the meeting, a number of participants expressed support for raising the target range for the federal funds rate to 50 basis points, arguing that this would achieve the monetary policy stance and that the currency is sufficiently limited.
However, most participants agreed that despite the Committee’s progress in tightening monetary policy, inflation remained well above the Committee’s 2 percent objective and the labor market remained strong. Austerity policies put pressure on wages and prices.
Participants believed that monetary policy should be restrained until the data provide confidence that inflation is expected to decline to 2% on a sustained basis, and the minutes noted that future gains within the target range should take into account cumulative monetary policy tightening, a lagging monetary policy impact on economic activity and inflation, and economic and financial developments.
Summary of Fed minutes:
- 2% inflation target.
- Unemployment is low at 3.5%.
- The federal funds target rate, 4.5% to 4.75%.
- Discuss the possibility of raising interest rates by 50 basis points.
Bitcoin price fell to a low of $23,578 after the release of the Fed minutes, but quickly recovered to $24,145 by press time.
Source: TradingView
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