Bitcoin News Today: Bitcoin's Fate Now Hinges on Fed's Tepid Growth Dilemma

Bitcoin prices could experience a rebound as signals from recent Federal Reserve policy discussions indicate growing support for earlier interest rate cuts. Minutes from the July meeting of the Federal Open Market Committee (FOMC) revealed a divided stance among policymakers, with two governors—Michelle Bowman and Christopher Waller—opposing the decision to keep the benchmark federal funds rate steady in the 4.25%–4.5% range. This marked the first time in over 30 years that multiple officials dissented in a rate decision, highlighting deepening concerns over labor market weakening and the potential economic impact of recent tariffs [1].

The FOMC minutes outlined a key internal debate between the risks of rising inflation and declining employment. While most officials considered inflation risks to be more pressing, a minority viewed labor market deterioration as the greater threat. Policymakers noted that inflation expectations could become unanchored due to the uncertain effects of tariffs, which have been a major point of contention within the committee. Additionally, the Fed characterized economic growth in the first half of 2025 as “tepid,” with signs of slowing consumer spending and early indicators of labor market strain [1].

The release of the minutes precedes Fed Chair Jerome Powell’s highly anticipated speech at the Jackson Hole symposium, where he is expected to provide further clarity on the central bank’s policy direction. Market participants are closely watching for signs that the Fed might shift toward a more accommodative stance, potentially cutting rates before the end of the year. The divergence in views within the FOMC suggests that future decisions will depend heavily on how incoming economic data shapes the balance between inflation and employment risks [1].

President Donald Trump has also intensified pressure on the Fed, now turning his focus to Governor Lisa Cook following recent allegations of mortgage fraud. In a social media post, Trump asserted that Cook “must resign, now,” citing concerns over potential violations of mortgage law. This adds to the broader political tension surrounding the Fed, as Trump has long criticized its reluctance to cut rates and has sought to replace members of the policy-setting committee with officials more aligned with his economic agenda [2].

While the Fed has maintained its interest rate target since December 2024, market expectations are building for a potential rate cut in September. The recent dissent by Waller and Bowman reflects a growing internal consensus that accommodative policy may be necessary to support the labor market. However, the central bank remains cautious, emphasizing the need for more data before adjusting rates. Powell has argued that premature rate cuts could exacerbate inflation, which remains above the Fed’s 2% target despite broader economic stability [1].

Investors are watching closely for signals of a policy shift, particularly given the recent political pressure and internal divisions within the FOMC. If the Fed moves toward rate cuts sooner than expected, it could provide a significant boost to Bitcoin and other risk-sensitive assets. The outcome of Powell’s Jackson Hole speech and the September policy meeting will be critical in shaping market sentiment and determining the trajectory of U.S. monetary policy in the near term [1].

Source:

[1] Fed minutes show division on rate policy as officials weigh inflation risk against labor market weakness (https://www.proactiveinvestors.com/companies/news/1077058/fed-minutes-show-division-on-rate-policy-as-officials-weigh-inflation-risk-against-labor-market-weakness-1077058.html)

[2] Trump Intensifies Scrutiny of Federal Reserve, Now Targeting Governor Lisa Cook (https://www.investopedia.com/trump-intensifies-scrutiny-of-federal-reserve-now-targeting-governor-lisa-cook-11794487)