FOMC and Bitcoin

FOMC Raises Fed Funds Rate by 25 Basis Points

In this section, the speaker discusses the recent FOMC decision to raise the Fed funds rate by 25 basis points to reach 5%. The speaker also talks about how they had previously predicted that the rate would end up in the 4-5% range.

Expectations for Future Rate Hikes

• The speaker believes that we are now at or near the terminal rate and does not expect rates to go much higher than 5.5%.

• However, there is more uncertainty now about how high rates will go than before due to recent events such as Silicon Valley Bank's tightening of credit.

• The speaker notes that Powell seemed somewhat dejected during his press conference and suggests that cracks may be starting to show within the economy.

Powell's Comments on Banking System and Inflation

This section covers some of Powell's comments during his press conference regarding the banking system and inflation.

Banking System

• Powell assured people that the banking system is safe and sound.

Inflation

• Powell committed to returning inflation back down to the two percent objective multiple times.

• Participants of the FOMC do not see any rate cuts this year, which disagrees with what the market is currently suggesting.

Fed's Monetary Policy Outlook

In this section, the speaker discusses their base case for the Fed's monetary policy outlook and provides insights into potential changes in terminology used by the committee.

Fed's Terminal Rate

• The speaker believes that the Fed has reached its terminal rate for raising rates.

• The terminal rate may only be 25 to 50 basis points higher than current levels.

• Another 25 basis point hike may not make a significant difference.

• A change in view may occur if inflation data and market response indicate otherwise.

Nuances in Terminology

• The committee anticipates ongoing increases in target range will be appropriate to attain a sufficiently restrictive stance of monetary policy to return inflation to two percent over time.

• The committee anticipates that some additional policy firming may be appropriate, indicating a potential pivot in terminology used by the committee.

Inflation and Credit Market Outlook

This section covers the speaker's views on inflation and credit market outlook.

Inflation Remains Elevated

• Inflation remains elevated according to the latest report.

• Recent revisions of inflation data have caused uncertainty about future trends.

Hyperinflation Unlikely

• Tightening credit conditions are unlikely to lead to hyperinflation.

• Rapid disinflation is more likely during the second half of this year than hyperinflation due to tightening credit conditions.

Recession Word Mentioned

• Pal mentioned recession during the meeting.

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