The Federal Reserve (Fed) published the minutes of its meeting held on June 16-17. The document, released on July 8, paints a picture of deep internal divisions among committee members. Despite the unanimous decision to keep the key interest rate unchanged at 3.50-3.75%, the discussion on the future of monetary policy was, according to Chairman Kevin Warsh, "heated" and continued for several consecutive days.
Split in the Committee: "Hawks" vs. "Doves"
All 12 voting members supported the pause, but the minutes revealed a lack of consensus on the possibility of a rate hike by the end of the year. Some participants openly stated that a June hike would have been justified, although they agreed to the pause. Notably, nine of the 19 committee members allow for at least one rate hike by the end of 2026. This contradicts earlier forecasts that did not anticipate further tightening. Warsh himself, chairing the Fed for the first time at this meeting, refrained from providing his own forecast, adding to the uncertainty.
Artificial Intelligence as a New Inflation Factor
The main point of contention was inflation risks. Fed experts raised their inflation forecasts for 2026 and 2027, pointing to three key drivers: trade tariffs, disruptions in energy supplies from Middle Eastern countries, and, most importantly, a sharp increase in investments in artificial intelligence infrastructure. The core Personal Consumption Expenditures (Core PCE) price index stood at 3.3% in April and rose to 3.4% in May — significantly above the Fed's 2% target.
While some participants believe that AI could reduce costs in the long term through increased productivity, in the short term, demand for data centers, complex equipment, and electricity continues to exert upward pressure on prices.
Bitcoin: Market Reaction and Prospects
The reaction of the cryptocurrency market was subdued but telling. At the time of the minutes' release, Bitcoin (BTC) was trading around $62,240, down approximately 2.7% over the day. This decline followed activity in the Bitcoin options market, where call options dominated before the release, and a BTC rebound to $64,000 amid capital inflows into ETFs.
This volatility demonstrates the crypto market's high sensitivity to Fed rate expectations. The next FOMC meeting is scheduled for July 28-29. As long as inflation remains above the target level and nine committee members continue to lean towards a hike, new inflation and labor market data will be crucial in determining whether Warsh's "family discussion" ends with another hike or a new pause.
My comment: The market is essentially ignoring the "noise" surrounding the Fed's disagreements, focusing on the fundamental fact: rates remain high, and the prospect of a cut is not in sight. For Bitcoin, this means continued pressure on liquidity and the absence of a catalyst for a confident bullish move in the coming months. The key driver may be not so much the Fed's decision itself, but macroeconomic data, especially on inflation.