The Federal Reserve (FED) meeting minutes reveal inflation concerns: Trump tariffs exert pressure, interest rate cut expectations cool.

Key Points: Interpretation of the Federal Open Market Committee (FOMC) Meeting Minutes and Interest Rate Cut Outlook

• Federal Reserve Takes a Cautious Stance: The latest released minutes from the Federal Open Market Committee (FOMC) meeting show that the Federal Reserve has adopted a cautious position against the backdrop of escalating global trade tensions.
• Inflation data is mixed: The minutes indicate that participants unanimously believe inflation indicators have declined in recent months and are below expectations. This is a potential positive for cryptocurrency holders seeking to hedge against inflation.
• Trump’s Tariffs Become a New Risk: However, attendees emphasized that the tariffs imposed by the Trump administration “could create upward pressure on prices,” triggering new inflation concerns, which may force the Federal Reserve (FED) to adopt a tentative stance on interest rate cuts, potentially delaying the upward momentum of risk assets such as cryptocurrencies.
• Uncertainty Regarding the Timing of Tariff Impact: Despite concerns about inflation, participants expressed uncertainty about the specific timeline for tariffs to trigger inflation. The meeting minutes revealed that participants generally believe that signing a trade agreement would help mitigate the inflationary effects related to tariffs.
• Latest Tariff Actions Add Pressure: Recently, Trump has sent letters to multiple countries, including Iraq, Algeria, and Sri Lanka, regarding the imposition of tariffs. These new tariff frictions, coupled with concerns about inflation, have significantly dampened the market’s enthusiasm for the Federal Open Market Committee (FOMC) Meeting in July to cut interest rates, and the sensitivity of the crypto market to the Federal Reserve (FED) rate decision has increased.

Trump Defends Tariffs, Diminishing Hopes for Rate Cuts - Crypto Market Liquidity Expectations Under Pressure

• Trump Rebuts Inflation Claims: Donald Trump has refuted claims that his tariff policy has exacerbated concerns about inflation in the U.S. He cited a study by the Council of Economic Advisers (CEA) stating that, contrary to reports, tariffs have no impact on inflation.
• Strong Employment Data Crushes Rate Cut Expectations: Despite Trump’s vigorous defense, the unusually strong U.S. employment data has caused market hopes for a rate cut in July to plummet to new lows. Currently, the market expects a 93.3% chance that the Federal Reserve will maintain interest rates in the 4.25%-4.50% range (425-450 basis points). The probability of rates falling below this level is only 6.7%, a significant drop from last week’s high of 23%.
• Trump Pressures for Significant Rate Cuts: Trump is pushing the Federal Reserve to cut rates by 300 basis points (3%), claiming that the delays by Fed Chair Jerome Powell are causing enormous losses in refinancing costs for the U.S. However, there is a significant gap between market expectations and Trump’s demands, highlighting the uncertainty of monetary policy, which may exacerbate short-term volatility in the crypto market.

Potential Impact on the Cryptocurrency Market:

• Continuation of High Interest Rate Environment: The Federal Reserve (FED) maintains a hawkish stance (higher for longer) means that borrowing costs remain elevated, which may suppress risk appetite and put pressure on highly volatile cryptocurrencies. Bitcoin and altcoin prices may continue to be under pressure.
• Delay in Rate Cut Expectations: The market’s delay in the Federal Reserve (FED) rate cut timeline (Fed pivot delay) has reduced expectations for liquidity improvement in the short term, and the appeal of crypto assets as a “risk-on” trade may weaken.
• Inflation and Policy Game: The Federal Reserve’s balancing act between inflation concerns (the risk of rising inflation) and economic growth remains a core focus. If tariffs indeed raise inflation and force the Federal Reserve to maintain high interest rates for a longer period, it will pose a continuous headwind for the cryptocurrency market.
• Pay attention to signals of policy shifts: Cryptocurrency investors need to closely monitor future economic data (especially inflation reports CPI/PCE) and speeches from Federal Reserve officials to look for any clues of a policy shift, which will be a key trigger for changes in market sentiment. In the long term, the onset of a rate cut cycle is still seen as a potential catalyst for a crypto bull market.