The U.S. Federal Reserve released the minutes of its June 16–17 meeting, and the document, published on July 8, shed light on a deep divide within the committee. Despite the unanimous decision to keep the rate at 3.50–3.75%, serious disagreements over the future course of monetary policy are hidden behind the facade of unity. Of particular concern is inflationary pressure, exacerbated by tariffs, rising energy prices, and an unprecedented boom in artificial intelligence infrastructure investment.
Heated debates under Warsh's leadership
The first meeting chaired by Kevin Warsh was memorable not so much for the final decision as for the intensity of the discussions. Warsh himself acknowledged that "there were heated debates in the team for a couple of days in a row — and I think the result turned out better." All 12 voters supported keeping rates unchanged, but there is no unity on the issue of a possible rate hike by the end of the year. Nine of the 19 committee members allow for at least one rate hike by the end of 2026, which sharply contrasts with earlier forecasts that did not anticipate further tightening. Significantly, Warsh himself refrained from publicly stating his position, leaving markets in uncertainty.
AI as a new inflation factor
Fed experts revised their inflation forecasts for 2026 and 2027 upward. Core inflation was 3.3% in April and was estimated at about 3.4% in May — significantly above the 2% target. The rapid development of the AI sector is becoming a key driver of price increases. Demand for data centers, complex equipment, and electricity is creating additional pressure on prices. Some meeting participants believe that AI investments could reduce costs through increased productivity, but this effect will only materialize years later. For now, the "construction boom" around artificial intelligence is only fueling inflation.
Bitcoin under pressure from hawkish rhetoric
The cryptocurrency market immediately reacted to the Fed's tightening tone. At the time of analysis, Bitcoin (BTC) was trading around $62,240, losing approximately 2.7% over the day. The decline followed activity in the options market, where call options dominated before the minutes were published. A few days earlier, Bitcoin had bounced back to $64,000 amid capital inflows into ETFs, but the publication of the minutes once again cooled buyer enthusiasm. The reaction shows how strongly the cryptocurrency market depends on rate expectations. Similar sensitivity was evident in the conflict over the Fed's independence and the situation with Governor Lisa Cook.
The next FOMC meeting is scheduled for July 28–29. As long as inflation remains above the target level and nine members continue to lean toward a rate hike, new data on inflation and the labor market will determine whether Warsh's "family discussion" ends with a rate increase or another pause.
My analysis: The Bitcoin market has found itself trapped in macroeconomic uncertainty. The split within the Fed and Warsh's reluctance to clearly state his position create fertile ground for volatility. Until inflation begins to steadily decline toward the target level, any "hawkish" signal will lead to sell-offs in risk assets. Bitcoin will need either a breakout above $65,000 with confirmation or a clear signal from the Fed that the tightening cycle is over to change the current downward trend.