The U.S. Federal Reserve (Fed) released the minutes of its June 16–17 meeting. The document, published on July 8, shed light on a heated debate within the Federal Open Market Committee (FOMC). Despite the unanimous decision to keep the rate at 3.50–3.75%, the minutes revealed deep disagreements over the future course of monetary policy.
This meeting was the first for Kevin Warsh, the new Fed Chair. All 12 voting members supported the pause, but the document indicates a lack of consensus on the need for further tightening. Markets, which are highly sensitive to any hint of a change in borrowing costs, received a strong signal of uncertainty.
Division in the FOMC: Inflation Risks and a "Family Feud"
Several meeting participants openly advocated for a rate hike as early as June but ultimately agreed to maintain the current level. Most officials cited persistent inflation risks linked to three key factors: trade tariffs, rising energy prices in the Middle East, and explosive demand for technology, data centers, and electricity driven by the artificial intelligence (AI) boom.
Based on the voting results, 9 out of 19 officials expect at least one rate hike by the end of 2026. Just a few months ago, such forecasts were nonexistent. Warsh himself did not provide a personal forecast, but at the press conference, he candidly described the discussions, calling them a "real family feud for a couple of days," which, however, led to the expected outcome.
AI Inflation: A New Pressure Factor on Markets
Fed experts raised inflation expectations for 2026 and 2027. Key drivers include rising tariffs, supply disruptions from Middle Eastern countries, and sharp investments in AI infrastructure. Core inflation stood at 3.3% in April and around 3.4% in May, significantly above the Fed's 2% target. Some meeting participants believe that AI spending could eventually lower costs through productivity gains, but this effect will take several years to materialize. For now, demand for data centers and high-tech equipment continues to push prices upward.
Bitcoin Under Pressure: Reaction to Hawkish Tone
At the time of writing, Bitcoin (BTC) is trading around $62,240, down approximately 2.7% over the past 24 hours. The market reacted to the publication of the minutes, highlighting the lack of a clear rate forecast from Warsh as the main source of uncertainty.
The decline occurred amid activity in the options market: shortly before the release, investors were betting on a rise, following Bitcoin's rebound to $64,000 driven by positive ETF inflows. This dynamic underscores the crypto market's sensitivity to rate expectations—a similar scenario played out earlier during the dispute over the Fed's independence involving Lisa Cook.
Macroeconomics and Crypto: The Connection Tightens
Before the minutes were published, Ryan Kerklie, co-founder and CEO of Global Settlement Network, noted that the dynamics of oil, government bond yields, and the dollar already reflected a reassessment of expectations: markets are pricing in prolonged inflation rather than a short-term spike. The minutes confirmed this trend, explaining the rise in inflation through increased demand from AI development, tariffs, and energy costs.
The next FOMC meeting will take place on July 28–29. Inflation remains above target, and nine committee members lean toward tightening policy. New data on inflation and the labor market will be decisive in determining whether the internal Fed dispute, which Warsh called a "family conflict," will continue with a rate hike or a pause.
My analysis: The current situation confirms that the cryptocurrency market is no longer an isolated asset. It is becoming increasingly integrated into the traditional financial system, and any move by the Fed now directly impacts investor sentiment. As long as hawkish sentiment persists within the FOMC, Bitcoin will remain under pressure, with support levels around $60,000 becoming critical for determining the short-term trend.