Fed Meeting Minutes Send Rate-Hike Signals: How Does 9-Member Support for Hikes Rewrite the Crypto Market Narrative?

In the early morning of July 9, 2026, Beijing time, the Federal Reserve released the minutes of the Federal Open Market Committee (FOMC) policy meeting held on June 16-17. The record of the first interest rate meeting chaired by new Chair Kevin Warsh shows that although the committee unanimously decided to keep the federal funds rate target range unchanged at 3.50% to 3.75%, internal divisions over the future path of rates are far from over. The hawkish signals from the dot plot are forcing global risk assets, including crypto assets, to reassess their valuation logic.

As of July 9, 2026, according to Gate market data, Bitcoin is quoted at $62,178, down 2.0% in 24 hours; Ethereum is at $1,740, down 2.0% in 24 hours. The core question the market is digesting is: why did the rate-cut narrative exit within three months, and how did the possibility of a rate hike return to the agenda?

Why did the dot plot reverse from "no rate hikes" to "9 support rate hikes" in just three months?

The March dot plot showed that none of the 19 Fed officials expected a rate hike in 2026, with the median rate expectation at 3.4%, and the market's mainstream interpretation was "still room for rate cuts this year." At that time, as many as 12 expected a rate cut this year, and 7 expected rates to remain unchanged.

By June, the situation had completely flipped. Warsh himself did not submit a rate forecast — continuing his long-standing reservations about the dot plot and the Summary of Economic Projections. Among the 18 officials who submitted forecasts, 9 expected a rate hike in 2026 — 3 predicted one hike (25 bps), 5 predicted two hikes (50 bps), and 1 predicted three hikes (75 bps). Meanwhile, the number of officials expecting a rate cut plummeted from 12 in March to just 1.

The median federal funds rate forecast for the end of 2026 was raised from 3.4% in March to 3.8%. The median rate expectations for 2027 and 2028 were also raised to 3.6% and 3.4% respectively, while the long-run neutral rate expectation remained unchanged at 3.1%. The dot plot median points to no rate cut in 2026 — with 9 votes for a hike and 9 votes for no change (including the delicate balance of Warsh not voting), creating a tie.

With 9 votes each for hiking and holding, what exactly is the debate inside the Fed?

The minutes show that among the 18 participants, 9 believed at least one rate hike is needed before the end of 2026, with 6 of them seeing a need for two hikes. But the other 9 officials expected rates to remain unchanged or be cut.

The minutes explicitly state that participants' individual assessments of the appropriate monetary policy under their respective most likely economic scenarios presented a "closely divided" two camps. Some members believe inflation will gradually cool, giving the Fed room to cut rates; another group believes prices will remain elevated, requiring rate hikes later.

This division is not accidental. Current US inflation year-on-year rose to 4.1%, significantly above the Fed's 2% policy target. The May Personal Consumption Expenditures price index rose 4.1% year-on-year, the highest since 2023; the core inflation measure excluding food and energy rose 3.4%. The Summary of Economic Projections also raised the 2026 core PCE inflation forecast from 2.7% to 3.3%. The combination of rising inflation and a downward revision of the 2026 GDP growth forecast from 2.4% to 2.2% — a "stagflationary" mix — adds extra complexity to the rate hike path.

One detail in the minutes worth noting: a few participants believed there was "ample reason to raise rates" at the June meeting, but they ultimately supported keeping rates unchanged. This means the division reflected in the dot plot is more about differing judgments on the future outlook rather than disagreement on current policy action.

Why was AI investment included in the Fed's inflation discussion framework for the first time?

This is the most groundbreaking content of these minutes. For the first time, the meeting minutes formally incorporated artificial intelligence investment into the inflation discussion. A few months ago, AI infrastructure investment was hardly a major source of inflation in Fed discussions. Now, it has been listed alongside the Middle East war and tariffs as one of the three major forces pushing up inflation.

Several officials explicitly noted that strong demand for AI infrastructure construction could push up the prices of tech products and electricity, thereby intensifying short-term inflation pressures. The minutes read: "Many participants commented that price pressures had become more broad-based, with most goods and services... experiencing significant increases."

The introduction of this variable has far-reaching implications. AI capital expenditure is becoming a new source of structural inflation — it not only affects the tech industry itself but also transmits through upstream and downstream industry chains such as electricity consumption, data center construction, and chip manufacturing to the broader price system. For the crypto market, this means that the causes of inflation are expanding from traditional monetary and fiscal factors to technology-driven supply-side cost increases, which have more complex and unpredictable response mechanisms to monetary policy.

How is the market pricing the probability of rate hikes in July and September?

According to CME FedWatch data as of July 7, 2026, the probability of the Fed maintaining the current rate at the July FOMC meeting is 74.3%, with a 25.7% probability of a 25-basis-point rate hike. This distribution means the market has largely ruled out a July rate hike in the base scenario.

More noteworthy is the probability matrix for September: the probability of keeping rates unchanged is 42.9%, the probability of a 25-basis-point hike is 46.2%, and the probability of a 50-basis-point hike is 10.8%. This implies the market sees the September meeting as the real battleground for the rate path in the second half of 2026 — the probabilities of a hike and no move are nearly even, with division at an extreme.

The June non-farm payrolls report released on July 2 was a direct catalyst for the recent probability shift. The report showed only 57k new jobs added, far below the market expectation of 110k to 114k; April and May data were revised down by a combined 74k. Before the data release, the market's implied probability of a July rate hike was around 30%, but it plummeted to less than 20% afterward. However, the unemployment rate fell from 4.3% in May to 4.2%, indicating some resilience in the labor market. This gives the Fed more policy space on its "employment" mandate, allowing it to shift more attention to the inflation dimension.

How do rate hike expectations change the pricing logic of crypto assets?

As an asset class that is non-yielding, highly volatile, and extremely sensitive to liquidity, crypto assets' pricing logic is deeply coupled with the Fed's monetary policy path. The shift from "rate-cut trade" to "rate-hike narrative" means the core assumptions of valuation models are being rewritten.

Under the "rate-cut trade" framework, the market expects loose liquidity to lower the risk-free rate and enhance the relative appeal of risk assets. Funds flow out of low-yield safe assets into high-risk assets, including crypto. But when the narrative switches to "rate hikes," the logic completely reverses: higher policy rates mean higher yields on safe assets, increasing the opportunity cost of holding non-yielding assets like Bitcoin.

After the June FOMC meeting, the market's expectation of a rate hike within the year once surged to over 80%. Although subsequent non-farm data pulled back this probability, the policy direction shift revealed by the dot plot has already occurred. The minutes show that among the 9 officials supporting rate hikes, 5 expect a 50 bps hike and 1 expects a 75 bps hike — if such aggressive rate hike expectations materialize, they would put significant pressure on the liquidity environment in the crypto market.

However, there is also a possibility of rate hike expectations receding. In the two inflation reports since the US-Iran conflict broke out, the structure has not shown a clear transmission of price increases into core inflation. The US and Iran have signed an agreement, and while oil prices have not returned to pre-conflict levels, they have fallen significantly from their highs. If oil prices continue to decline and the impact on inflation is further confirmed to weaken, the expectation of a rate hike this year could still retreat.

Why has the communication reform under Warsh left the market more "confused"?

Another highlight of these minutes is the change in communication style under Warsh. Most officials supported shortening the post-meeting statement and favored removing language hinting at the next policy tilt. The final policy statement was significantly reduced from 341 words in April to about 130 words, deleting the "easing bias" and forward guidance that hinted at possible future rate cuts. The statement no longer mentions the economic and monetary policy outlook, instead emphasizing a data-dependent approach.

In his press conference, Warsh made clear that he would not revisit the inflation target until inflation returns to 2%. He also announced the establishment of five independent working groups covering the Fed's communication mechanism, balance sheet management, data sources and reliance, productivity and employment, and the inflation framework.

This "Greenspan-esque" ambiguous communication style has led the market to price itself in the absence of clear policy signals, actually amplifying the volatility of rate hike expectations. Not only did Warsh personally refrain from submitting a rate forecast, but he also clearly denied the guiding significance of the dot plot at the press conference, calling it merely a "scenario judgment with an eraser" rather than a commitment to the future policy path.

What does this change mean for the crypto market? The disappearance of forward guidance reduces the predictability of the policy path. The market loses a key policy anchor and has to rely more on real-time interpretation of economic data. This means that the volatility of crypto assets could further increase — every inflation data point and employment report could trigger a sharp repricing of expectations.

FAQ

Q: Did the Fed actually raise rates at the June meeting?

No. The FOMC voted 12-0 to keep the federal funds rate target range unchanged at 3.50% to 3.75% for the fourth consecutive meeting. The hawkish signals came from the dot plot's forecast of the future rate path, not from the current rate decision itself.

Q: What does 9 people supporting a rate hike mean?

Among the 18 officials who submitted rate forecasts, 9 expect at least one rate hike before the end of 2026. Among them, 3 expect a 25 bps hike, 5 expect a 50 bps hike, and 1 expects a 75 bps hike. In March of this year, the number making the same judgment was zero.

Q: Why does AI investment affect inflation?

The minutes note that strong demand for AI infrastructure construction could push up prices of tech products and electricity, thereby intensifying short-term inflation pressures. AI capital expenditure transmits through upstream and downstream industry chains such as data center construction, chip manufacturing, and electricity consumption to the broader price system, becoming a new source of structural inflation.

Q: What is the probability of a rate hike in July?

As of July 7, 2026, CME FedWatch data shows a 25.7% probability of a 25 bps hike in July, and a 74.3% probability of no change. The market has largely ruled out a July rate hike in the base scenario.

Q: How will crypto assets be affected?

Rising rate hike expectations mean a higher risk-free rate, increasing the opportunity cost of holding non-yielding assets like Bitcoin. The shift from "rate-cut trade" to "rate-hike narrative" is forcing a repricing of crypto asset valuations. However, rate hike expectations could also recede, with the final path depending on subsequent inflation and employment data.