Bitcoin: Cryptocurrency investors are closely following the statements of Fed Chairman Jerome Powell. Stating that the US economy has the capacity to overcome harsh financial measures, Powell said that the rise in inflation may come with more surprises. Bitcoin, altcoin and gold market fell slightly after the statements.
- 1 Fed Chairman Powell’s interest rate statement
- 2 Fed Chairman says continued rate hikes would be appropriate
- 3 How did Bitcoin, gold and SHIB react?
- 4 Bitcoin and altcoins falling
- 5 Share this:
Fed Chairman Powell’s interest rate statement
Fed Chairman Jerome Powell said at a meeting in Washington that continued interest rate hikes would be appropriate. Key takeaways summarized by Reuters:
- The Fed is strongly committed to bringing back inflation and is moving swiftly to do so.
- The pace of future rate hikes will continue to depend on incoming data and the improving economic outlook.
- We will take our decisions by meeting.
- Reducing inflation is essential for US II to have strong labor market conditions that benefit all Americans.
- Available data for May suggest that core inflation is likely to hold or ease slightly at April’s 4.9% annualized pace.
- The Fed’s overarching focus is on returning inflation to its 2% target and keeping longer-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 restrictive 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 dropped slightly over the past month.
Fed Chairman says continued rate hikes would be appropriate
At its monetary policy meeting last week, the Fed raised interest rates by 75 basis points to keep inflation from rising, making it the largest rate hike since 1994. Powell says it would be prudent to continue raising interest rates, but the increase will be determined by the economic statistics and economic forecast to be released. Powell adds that the economy is strong enough to maintain restrictive monetary policy. Other headlines summarized by Reuters include:
- Recent data shows real GDP picking up in the current quarter, consumer spending remains strong.
- Growth in business fixed investment appears to be slowing. The housing sector appears to have softened, in part due to higher mortgage rates.
- Tightening financial conditions should 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 the face of the rapidly evolving economic environment, our policy is adapting and will continue to do so.
- Financial conditions have tightened ‘significantly’. This reflects both the measures taken so far and the expected actions.
- The Fed will continue to communicate its thoughts as openly as possible.
- Inflation is clearly surprising upwards. There may be other surprises; The Fed will need to be agile in responding to incoming data and the evolving outlook.
- 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) fell after the comments. At the time of writing, Bitcoin is trading at $20,713.28, down 3.99% in 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 climbed above $1,840. As FOMC Chairman Powell stated, the benchmark 10-year US Treasury yield fell more than 4% on the day, fueling the daily rally of XAU/USD. Gold saw some selling on Wednesday for the fourth consecutive day. 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 fell after Powell’s statements. Ethereum’s last 24-hour depreciation is hovering above 5%. AmkNews.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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