From June 16 to 17, 2026, the FOMC held its June monetary policy meeting, ultimately unanimously approving to keep the target range for the federal funds rate locked at 3.5%–3.75%. Since it was set in December 2025, the rate has stagnated at this level for seven times. The meeting minutes released in the early hours of July 9 (Beijing time) tore open a gap in this stagnant rate facade: on the future path of inflation, officials' expectations began to show more pronounced divisions—on one hand, the minutes emphasized that if inflation remains persistently above target and the breadth of price increases expands further, almost all officials support maintaining high rates or even tightening monetary policy further; on the other hand, another scenario was provided: if inflation quickly falls back near the 2% target, “holding steady” also becomes the default option, but no specific timing or magnitude for rate hikes was disclosed. What truly makes this minutes stand out is a statement that had never appeared before: investments related to artificial intelligence were explicitly written in for the first time, viewed as a new variable that may change economic and inflation prospects, while its specific impact remains undecided. With rates unchanged, inflation divisions exacerbating, and AI entering decision text yet not being quantified, under this set of mutually constraining signals, the upcoming story is no longer just about “how long high rates can be maintained,” but rather how the market will reprice interest rate paths and various risk assets amidst the dual uncertainties of inflation and AI.
Two Paths for Inflation: Exposing Division Within the Fed
The minutes provide not a clear interest rate roadmap but two opposing inflation scenarios. If inflation stubbornly stays high, almost all officials support maintaining the current high rate environment and tightening monetary policy if necessary; if prices quickly retreat to around the 2% inflation target, almost everyone agrees to maintain rates unchanged for a considerable period. This document deliberately avoids a narrative of rate cuts, presenting only a conditional tree centered around inflation performance: if inflation does not decrease, there can be no relaxation; if inflation “unexpectedly cooperates,” policy will also remain unchanged.
The real division lies not in the superficial question of “whether to hike rates” but in the fundamental judgment on the persistence of inflation. A minority of attendees already believed the current data was sufficient to support a rate hike immediately, but in June’s vote, they ultimately also joined the consensus to keep rates unchanged, collectively choosing to leave the debate in the minutes' text rather than putting it in the rate decision. Meanwhile, the minutes did not provide any specific predictions for timing or magnitude of rate hikes, leaving only conditions, concerns, and possible directions, allowing the market to face a policy function lacking a temporal coordinate. Within this framework, traders find it difficult to write out a single script for the interest rate path; they can only repeatedly switch expectations between “inflation persistently high” and “quickly returning to target,” accepting the reality that future rates are shaped by uncertain inflation trajectories and internal viewpoints’ fractures.
Seven Times of Inaction: Interest Rates Locked at High Levels
Since lifting the federal funds rate target range to 3.5%–3.75% in December 2025, the Fed has chosen the same action in its subsequent seven meetings: to keep rates unchanged. On the surface, it seems like “doing nothing,” but in essence, it pins a relatively high rate level above the economy; as time stretches, this inaction itself has become the most important policy signal. More subtly, on this trajectory, while keeping rates unchanged, the Fed has gradually eliminated hints about future adjustment directions from policy statements, until this decision completely wiped out forward guidance, leaving only a framework of “dependent on inflation data,” interpreted by the market as a formal entry into a wait-and-see mode. In other words, rates remain unchanged not because the risks have disappeared, but because the decision-makers refuse to tell you in advance where to go next, binding all paths to future inflation readings and the duration of price pushing forces.
For risk assets, such long-term high rates are more damaging than a one-time rate hike: the discount rate is locked at a high level, the assumption in the valuation model that “rates will drop soon” is repeatedly recalculated, and prices can only seek balance along a steeper capital cost curve. The minutes emphasize that if inflation continues to stubbornly stay high, almost all officials lean towards maintaining or even tightening further, which conveys a clear but time-agnostic conclusion to the market—cheap funds will not easily return. In sectors deeply intertwined with technology and crypto, prolonged high rates mean tightening financing windows and harsher discounting of project cash flows; any narratives regarding future growth must first pass through the hard constraint of interest rates, and long-term high rates are gradually shifting the pricing focus of risk assets towards capital costs rather than pure sentiment.
The Warning Signal That AI Investment is Included in the Minutes for the First Time
When investments related to artificial intelligence first appeared in the June meeting minutes, identified as a “new variable affecting economic and inflation prospects,” the Fed was essentially telling the market: AI is no longer just a growth story told by businesses and venture capital, but a macro clue capable of disturbing whether inflation can return to the 2% target. The minutes did not provide any quantitative estimates nor delineate clear transmission paths, yet reinforced concerns about inflation risks and the expansion of price increases in the same document; this "naming without concluding" approach resembles a preemptively issued risk alert—policymakers have realized that AI capital expenditures may change the situation, but they themselves are still uncertain about what direction to take.
From the Fed's perspective, the potential impact of AI investment on inflation results from multiple forces overlapping. On the one hand, the construction of computing facilities, chip and software procurement, and competition for high-skilled labor are pushing prices and wages in specific industries upward on the demand side, adding another layer of local heat to already stubborn inflation; on the other hand, if AI truly boosts productivity, it may lower the marginal cost of certain services on the supply side, creating forces opposite to demand expansion. The reshaping of the employment structure makes this equation even more complex: some jobs are replaced, while new jobs concentrate in higher-skilled and higher-paying fields, redistributing income and bargaining power within the labor market, compelling the traditional framework for judging price pressures based on “total demand + employment gap” to incorporate previously non-core variables such as technology diffusion speed and the pacing of capital expenditures. As tech investments (including AI) and the crypto market deepen their intersection in funding sources and investor structures, the feedback loop between inflation, asset prices, and technology cycles thickens, and after AI was written into the minutes, the Fed's inflation analysis framework itself has become a new variable needing continuous observation.
Cryptocurrency Venture Capital Bets on AI in Sync with the Fed's Perspective
As the minutes included AI-related investments in the inflation analysis framework, leading capital in the crypto world is also tilting in the same direction. According to a single source report, the veteran crypto venture capital firm Paradigm recently raised approximately $1.2 billion to bet on AI direction. This is not an isolated fundraising news but a microcosm of the overall risk exposure migration of tech capital: shifting from a “pure crypto narrative” to a composite story of “AI×crypto,” encompassing computing power, data, and on-chain experiments into the same capital funnel. The minutes released after the June FOMC meeting first treated such AI investments as new variables affecting economic and inflation prospects, indicating that the Fed and crypto venture capital are focusing on the same technological main line, almost simultaneously looking towards AI; this synchronicity itself signifies that the technology cycle has been included in the macro game table.
More crucially, there is an overlap at the funding level. The intersection of tech investments (including AI) and the crypto market in funding sources and investor structures is deepening; funds like Paradigm serve as both price anchors in the primary crypto market and a central hub for tech risk assets. When it prioritizes allocating new ammunition to AI, it indicates that the marginal capital willing to pay for “pure on-chain stories” is tightening. The Fed's acknowledgment in the minutes that AI investment may elevate or change the inflation path means that tech capital expenditures have been incorporated into the checklist for interest rate decisions, thus upgrading the interaction between tech investments and monetary policy: maintaining high rates at 3.5%–3.75% will constrain the valuation imagination space for AI and crypto, while the reallocation of tech capital between AI and crypto will conversely influence the readings of inflation and asset prices; this dual constraint is becoming a hard constraint that the crypto narrative must face.
The Next Round of Game Between Inflation, AI, and Crypto Assets
On the path of persistently high inflation, the minutes have provided a clear framework: almost all officials support maintaining high rates, and if necessary, tightening further. The 3.5%–3.75% rate range in this scenario resembles a “pressure chamber” that can be extended, continuously squeezing the valuation imagination of high-risk assets, leading funds to instinctively favor those related to AI, which can quickly convert into income and efficiency in the real economy, rather than longer-duration and more liquidity-sensitive crypto narratives. The reported allocation of approximately $1.2 billion by Paradigm to bet on AI is a concrete expression of this preference at the capital level: tech funding is reallocating risk and inflation exposure between AI and crypto, and the expectation of policy tightening in a high inflation scenario reinforces the direction of this reallocation.
The other path is a quicker retreat of inflation to around the 2% target. The minutes indicate that in this scenario, officials are inclined to maintain rates unchanged, with pressure more stemming from the duration rates remain high rather than additional hikes. For crypto and AI assets, this means that risk appetite can recover temporarily but still must compete for capital under the financing constraint of 3.5%–3.75%: those who can embed AI as a macro variable into their valuation models and clearly explain the transmission chain of inflation, interest rates, and their cash flows are more likely to gain pricing power in the new cycle. The crypto narrative needs to shift from merely expecting “liquidity recovery” to finding its functional position within the AI investment cycle—whether it is providing decentralized infrastructure for computing power and data or assuming cross-market settlement and incentive mechanisms—and within this positioning, accepting a valuation framework shaped by both interest rates and inflation.
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