Cryptocurrency investors are closely following Fed Chair Jerome Powell’s statements. Asserting that the US economy has the capacity to overcome tough financial measures, Powell said rising inflation could come with more surprises. The Bitcoin, altcoin and gold market dropped slightly after the statements.
Fed Chair Powell’s Interest Rate Statement
Fed Chair Jerome Powell told a meeting in Washington that continued interest rate hikes would be appropriate. Key findings summarized by Reuters:
- The Fed is strongly committed to containing inflation and is moving quickly to do so.
- The pace of future rate hikes will continue to depend on incoming data and improving economic prospects.
- We will make our decisions in a meeting.
- Reducing inflation is essential for the US II to have strong labor market conditions that benefit all Americans.
- Available data for May suggest that core inflation is likely to maintain or decrease slightly at the annualized pace of 4.9% in April.
- The Fed’s main focus is to return inflation to its 2% target and keep long-term inflation expectations firmly fixed.
- Prolonged supply chain restrictions, Russia’s invasion of Ukraine and Covid lockdowns in China are exacerbating inflation, which is likely to exacerbate supply chain problems.
According to Jerome Powell, the US economy is robust enough to withstand tight monetary policy. He says the Fed remains significantly above its 2% target, but there are some indications that core inflation, which excludes food and energy costs, may have fallen slightly in the past month.
Fed chairman says continued rate hikes would be appropriate
At its policy meeting last week, the Fed raised interest rates by 75 basis points to keep inflation from rising, becoming the biggest rate hike since 1994. Powell says it would be prudent to continue raising interest rates. interest, but the increase will be determined by economic statistics and economic forecasts to be released. Powell adds that the economy is strong enough to maintain tight monetary policy. Other headlines summarized by Reuters include:
- Recent data shows that real GDP is recovering in the current quarter, consumer spending remains strong.
- Corporate fixed investment growth appears to be slowing. The real estate sector appears to have slowed, in part due to higher mortgage rates.
- Tighter financial conditions are expected to continue to slow growth and help balance supply and demand.
- While the demand for labor is very strong, the supply of labor is suppressed. The labor force participation rate has also changed little since January.
- In light of the rapidly changing economic environment, our policy is adapting and will continue to do so.
- Financial conditions tightened ‘significantly’. This reflects both actions taken so far and expected actions.
- The Fed will continue to communicate its thoughts as openly as possible.
- Inflation is clearly staggering upwards. There may be other surprises; The Fed will need to be agile in responding to incoming data and evolving prospects.
- The economy is very strong and in a good position to deal with tighter monetary policy.
How did Bitcoin, gold and SHIB react?
These comments are unlikely to have a significant impact on the dollar’s performance against its main rivals. At the time of writing, the US Dollar Index is down 0.1% on the day at 104.30. Bitcoin, Ethereum, Cardano and Shiba Inu (SHIB) all dropped after the comments. At the time of writing, Bitcoin is trading at $20,713.28, down 3.99% over the last 24 hours. Earlier this morning, it recorded a daily low of $20,045.63.
Gold rose in the second half of the day. Meanwhile, it rallied above $1,840. As FOMC Chairman Powell stated, the benchmark 10-year US Treasury yield was down more than 4% on the day, fueling the daily rally in XAU/USD. Gold saw some selling on Wednesday for the fourth day in a row. Meanwhile, it dropped to a four-day low around the $1,823 region in the first half of the European session.
Bitcoin and altcoins falling
Bitcoin and Ethereum both tumbled after Powell’s statements. Ethereum’s latest 24-hour depreciation is hovering above 5%. cryptocoin.com As we reported, SHIB, which rose more than 30% on June 21, is trying to maintain its momentum. At the time of writing, it has lost about 1.5%.
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