Just in! Fed minutes leaked: No rate hike this year? $BTC Darkness before dawn or the last chance to escape?

Let's talk about a big event today—the Fed bigwigs just wrapped up their meeting, leaving a hint, and Wall Street wolves are on the move.

On July 8, the June FOMC meeting minutes were released. In black and white: all participants agreed to keep the federal funds rate at 3.5% to 3.75% unchanged. The market initially feared it would be hawkish, but after reading it found—wow, this is not a hawk, it's a dove in hawk's clothing. Because the minutes showed no urgency for any near-term rate hike.

As soon as the news came out, Goldman Sachs, Morgan Stanley, and Citigroup immediately released reports, with remarkably consistent core judgment: the Fed is now data-dependent; wherever inflation goes, rates will follow.

Goldman Sachs Chief Economist Jan Hatzius's team directly stated: the watershed in the minutes is whether inflation can "quickly" start to decline. If so, almost all officials who discussed this scenario supported "maintaining or eventually lowering" rates; if not, similarly, almost all officials who discussed the high inflation scenario believed "some degree of policy tightening may be necessary." Two paths, one key—inflation data.

The most eye-catching line is that a "few" participants thought there were "grounds for a rate hike" at the June meeting. But Morgan Stanley's Michael Gapen immediately interpreted: this is different from "leaning toward a rate hike." Those few clearly stated they were satisfied with keeping rates at current levels. Citigroup's Andrew Hollenhorst also cited the minutes: these people "expressed support for maintaining the current target range at this meeting." In other words, even if they saw justification for a hike, no one actually dared to press the button at this juncture.

Don't forget, in the previous dot plot, nine officials expected rate hikes in 2026, several of them expecting two to three hikes. But from the wording of the minutes, this hawkish tendency did not translate into willingness to act.

The core logic of the minutes in one sentence: wherever inflation goes, rates will follow. Goldman Sachs team outlined two scenarios—

Scenario 1: Inflation pressures subside, prices "quickly" return to the 2% target. Almost all officials who discussed this scenario believed that at that time they should "maintain or eventually lower" the federal funds rate.

Scenario 2: Inflation remains elevated due to AI-related demand, Middle East conflict, tariffs, and other factors. Almost all officials who discussed this scenario believed that "some degree of policy tightening may be necessary."

Specifically, participants generally noted that both core and headline inflation moved higher, "well above" the 2% target, mainly due to tariff impacts, supply chain disruptions from a blockade of the Strait of Hormuz, and strong demand from AI investment. Several officials noted that price pressures have become broader, covering transportation, airfares, petrochemicals, and agricultural inputs; services inflation excluding housing "remains elevated."

But they did not rush to act, for two key reasons: first, inflation expectations remain consistent with the path back to target; second, many officials believe the labor market is "currently not a source of inflationary pressure." Citigroup's Hollenhorst added that the June nonfarm payrolls data came in below expectations, with prior months revised down, further easing concerns about the labor market reigniting inflation. Therefore, the current high inflation is more of a supply-side shock, not runaway demand.

Regarding the phrase "some degree of policy tightening," Morgan Stanley's Gapen provided a quantitative interpretation: it roughly means a "recalibration of policy stance," i.e., a rate hike of 50 to 75 basis points, not the start of a full rate hike cycle. Gapen also used the word "quickly" to define the Fed's patience boundary—they think it's about "the next few months," specifically possibly the next three to four inflation data releases. If inflation dissipates and supply-side pressures are temporary, staying put is the right answer.

Some in the market worried that new Chair Warsh might push for a fundamental shift in the monetary policy framework—no longer "data-dependent" but proactively tightening. Morgan Stanley poured cold water on that: the minutes do not point to an "institutional shift" in the Fed's reaction function. The paragraphs on the monetary policy outlook are entirely within the previous "data-dependent" framework. The logic is simple: if inflation subsides, stay put or even open the door for future easing; if inflation persists, it may reverse some or all of the previous rate cuts made for risk management. This shows data still matters, and the committee remains uncertain about the inflation path.

In terms of communication strategy, this minutes is basically the same as previous ones, retaining forward-looking statements, scenario analysis, and common phrases like "a few," "some," and "most." Morgan Stanley also specifically noted that earlier the market worried Chair Warsh might significantly reduce the amount of information in the minutes, but "the new minutes look very similar to the old ones."

Finally, let's talk about the forecasts of the three major institutions. The direction is consistent but details differ:

Morgan Stanley expects that if inflation subsides as expected, the Fed will keep rates unchanged this year, with two 25-basis-point rate cuts in 2027 or later. Gapen believes there is insufficient data support for a July rate hike, but if inflation exceeds expectations, a September rate hike is "theoretically possible."

Goldman Sachs expects core PCE year-over-year to fall to 3.0% (currently 3.4%) by end-2026, core CPI to 2.6% (currently 2.9%), with monthly readings staying moderate in the coming months. The base case is rates unchanged throughout 2026, but acknowledges some rate hike risk.

Citigroup is the most dovish. Hollenhorst believes the market's pricing of a July rate hike is "too hawkish relative to the Fed's reaction function." He expects that as unemployment rises in the coming months, the balance within the committee will shift from rate hikes to rate cuts, with a base case of 25-basis-point cuts in October and December of this year, and another 25-basis-point cut in January 2027.

To summarize: the Fed is now taking cues from inflation, with no urgency to hike in the short term. For risk assets like $BTC and $ETH , this is a mild respite window. But don't celebrate too early—once data blows up, the knife can fall at any time.

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