The January FOMC meeting, which had two dovish departures, showed that the Federal Reserve (Fed) is deeply divided.
Policymakers mainly supported the current policy stance, but some members argued for a “two-way mention” reflecting the possibility of future interest rate hikes, suggesting that rates could resume increasing if inflation exceeds targets.
Fed minutes content is mixed…Bitcoin weak
Recent macroeconomic indicators supported Jerome Powell's cautious yet optimistic outlook.
Economic growth rates were higher than expected, inflation is showing a downward trend, and the labor market is stabilizing.
This flow has increased expectations for a rate cut in 2026, but following the stronger-than-expected employment report released last week, a March cut has been effectively ruled out.
The minutes also revealed detailed discussions regarding inflation and productivity.
Several committee members warned that disinflation could progress more slowly than anticipated.
Some others stated that if inflation falls as expected, additional rate cuts may be necessary, while other committee members pointed out that too many cuts could exacerbate inflationary pressures.
Productivity increases were highlighted as a potential factor that could mitigate future inflation.
Market vulnerability was also a major point of discussion, with several attendees pointing out the risks in private credit and the overall financial system.
Experts analyze that these concerns and the Fed's hawkish stance have led to a preference for safe assets like government bonds and the dollar, while Bitcoin remains under downward pressure.
"The minutes show that the Fed is still divided, but it is paying attention to both inflation risks and growth trends," said a senior market strategist. "Part of Bitcoin's underperformance is a result of risk-averse sentiment and a strong dollar."
Investors are expected to pay attention to the Fed officials' additional comments as the market digests the minutes, weighing the balance between hawkish caution and dovish optimism regarding the direction of monetary policy in 2026.