XRP and the broader cryptocurrency market pulled back on Wednesday as hawkish commentary from the U.S. Federal Reserve cast a shadow over recent bullish sentiment.

Federal Reserve Minutes Trigger Market Caution

Remarks from the Federal Open Market Committee’s (FOMC) late July policy meeting indicated that policymakers are more concerned about inflation risks than labor market weakness. According to the published minutes, a majority of Fed participants emphasized that “the upside risk to inflation” outweighed potential concerns surrounding employment data. They cited uncertainties arising from tariffs and the possibility that inflation expectations could become unanchored.

This cautious tone from the U.S. central bank quickly reversed a brief crypto rally that had begun earlier in the session. Major coins, including XRP, saw their gains fade following the release.

Crypto Market Reacts With Pullback

Bitcoin (BTC) had initially posted modest gains of 0.7%, but those were nearly erased after the Fed’s minutes went public, leaving the price marginally in the green at $113,300. Ether (ETH), which had enjoyed one of the better sessions among major assets, cooled from a 4.5% increase to a 2.3% rise, settling at $4,270.

While direct XRP figures were not detailed, the broader market retreat suggests similar downward pressure on Ripple’s token, which often tracks momentum from bitcoin and ether trends.

Employment Data Could Have Altered Fed Stance

Importantly, the Fed’s July meeting took place before the release of the August 1 U.S. employment report, which painted a worrying picture of job market softness. The Reuters report highlighted sluggish job growth in July and a notable downward revision of 258,000 positions in the prior two months’ data.

Had this weaker labor data been available during the FOMC meeting, there’s speculation the committee may have adopted a more dovish stance, possibly even opening the door for rate cuts instead of continued vigilance on inflation.

All Eyes on Powell’s Jackson Hole Appearance

Market watchers now turn their attention to Jackson Hole, where Federal Reserve Chair Jerome Powell is expected to speak at the Kansas City Fed’s esteemed Economic Symposium. Historically, Fed leaders have used this platform to hint at imminent changes in monetary policy direction.

Given Powell’s recent trend of hawkish rhetoric, analysts are keen to see if he maintains the firm anti-inflation tone or signals a potential easing of stance ahead of the September policy meeting. Analysts expect Powell to adopt a data-dependent approach, highlighting the significance of upcoming employment and inflation figures before determining any rate cuts or changes in monetary policy.

Related: XRP Price: $12M Max Pain for Bears

With XRP and other digital assets so closely tied to macroeconomic conditions, Powell’s Jackson Hole remarks could prove pivotal for the asset’s near-term direction.