The Fed meeting minutes from 5 years ago, long sealed, have finally been released. During that critical meeting in September 2020, Powell pushed through an ultra-loose policy against widespread opposition—keeping interest rates near zero and promising that only full employment plus inflation reaching 2% and staying overshot would trigger a rate hike. Several members opposed at the time, and 2 chairs voted against on the spot, but he still firmly finalized the decision.

Why such persistence? Powell was concerned that after the policy framework adjustment, credibility would be damaged, and he was unwilling to delay implementing this guidance. The Federal Reserve had just abandoned the traditional approach of preemptive rate hikes to combat inflation, and he believed swift action was necessary.

What was the result? This promise became a shackled constraint for the Fed. In September 2020, inflation was only 1.3%, and the Fed itself projected it would only reach 2% by 2023. But unexpectedly, inflation started spiraling out of control the following year, peaking at 7.2% by mid-2022. Ironically, it was precisely because of that commitment’s constraints that the Fed delayed rate hikes until March 2022, completely missing the optimal window to control inflation.

Powell himself publicly admitted in November 2022 that he would never make similar rate commitments again. But the significance of this record lies in its clear illustration of the underlying logic and internal disagreements behind this key decision during the pandemic.

For the crypto market, macro policies have always been the primary driving force. The inflation ripple caused by that decision still influences the Fed’s policy expectations today. In such an environment of uncertainty, should crypto assets prioritize safe-haven assets or buy the dip? This is a question every participant should seriously consider.