FOMC minutes highlight the Fed’s concerns about Trump’s policies

The Federal Reserve He released minutes of his Dec. 17-18 meeting on Wednesday, which showed growing concern among officials about the economic impact of President Donald Trump's policy proposals.

In its minutes, the Federal Open Market Committee (FOMC) discussed a range of issues, from inflation risks to the expected slowdown, reflecting the Fed's cautious approach through 2025.

The Fed's cautious approach to rate cuts between inflation and economic risks

The FOMC minutes highlighted the decision to implement a 25-basis-point (0.25%) rate cut. Almost all participants supported a gradual approach to further monetary easing. Several authorities have emphasized the importance of informed decision-making, particularly as inflation remains above target.

“Several participants pointed out that a variety of factors require a cautious approach to monetary policy decisions in the coming quarters,” the minutes said.

Some officials, however, have argued for flexibility. He pointed out the conditions under which the price reduction could accelerate if inflation comes down or if the labor market situation deteriorates more than expected. Despite these differing views, it would be prudent to avoid policy mistakes as the Fed continues to review its rate of neutrality.

The minutes signaled rising inflationary concerns, which many Fed members attributed to Trump's trade and immigration policies. Core personal consumption expenditures (PCE) inflation stood at 2.8% in October, and officials had expected an improvement to make it slower than initially expected.

“Inflation concerns remain balanced, although the recent higher-than-expected readings require close monitoring,” the report added.

While the labor market has shown modest improvement, unemployment is expected to remain low at 4.2 percent and GDP growth is expected to remain strong. However, several participants indicated that the financial burden on low-income families could be a concern.

Markets are responding to the Fed's stance on Trump's policies

Fed officials have expressed concern over Trump's trade and immigration plans, which they say could exacerbate inflation. These policies could slow the Fed's progress toward its inflation and employment goals, the minutes suggested.

“Higher tariffs and stricter immigration controls could potentially disrupt supply chains and labor markets and further complicate the Fed's operations,” one participant said.

Critics were quick to respond. Zero Hedge, a popular user on X (formerly Twitter), commented on fears of federal officials and the inflationary response from Trump's policies.

“So the Fed doesn't react (even when inflation bites in the ass), but it's opposed to a president's policy that doesn't even agree with policy,” he said.

The crypto market felt the impact of the FOMC minutes, with Bitcoin (BTC) experiencing a sharp decline. Shortly after the minutes were released, BTC dropped to $92,500. With the Fed's cautious tone leaving markets on edge, this decline reflects the market's sensitivity to monetary policy uncertainties.

The collapse of Bitcoin and crypto markets highlights the interplay between fiscal policy, monetary decisions and market sentiment. The market reaction comes as analysts hope that Trump's pro-crypto stance will significantly shape future market trends.

BeCrypto reports that Trump's policies could strengthen the adoption of cryptocurrencies. However, others believe that these policies carry risks of regulatory rigor that can lead to volatility.

According to BeInCrypto data, BTC was trading at $93,001 at the time of writing, down more than 3% from the opening of Thursday's session. As Trump's policies take shape in the coming months, the Fed's balancing act will remain a focal point for both traditional and crypto markets.