Fed Committee Divided on Rate Hike as Gold Surpasses Bitcoin

Former Federal Reserve President Jim Bullard says the committee is split almost down the middle on whether to raise interest rates next month, with a vote of 10-9 in favor of either side.

Bullard, who served as president from 2008 to 2023, made this statement during an interview with Kitco News. He emphasized that even if the committee chooses not to raise rates next month, it could still be seen as hawkish and signal further tightening later in the year.

The current market expectations suggest a 60% chance of a rate hike in September, while the odds of a cut are nearly zero. Bullard's comments come after Fed Chair Kevin Warsh stated that the central bank owns the responsibility for sustained elevated inflation over the past 65 months.

Bullard also highlighted the significance of gold as an indicator of eroding faith in the Federal Reserve. He noted that physical gold has become more desirable than Bitcoin among foreign central banks, which could signal a shift in their investment strategies.