Fed Chairman Jerome Powell said restoring price stability would require a restrictive policy stance ‘for a while’. How did the Bitcoin, Ethereum and gold market react?
Fed Chairman Powell’s interest rate statement
Federal Reserve Chairman Jerome Powell delivers keynotes and talks about the policy outlook at the central bank’s annual Jackson Hole Economic Symposium in Wyoming. Key remarks quoted from the meeting:
- The central bank ‘deliberately’ pushes policy to a sufficiently restrictive level to return inflation to 2%.
- Re-establishing price stability will take some time and will require ‘forced’ the tools of the central bank.
- Lowering inflation will likely require a period of below-trend growth.
- Most likely, there will be some softening in working conditions, some bitterness for households.
- These are the unfortunate costs of curbing inflation, but the inability to stabilize prices means much greater pain.
- The overall focus is to bring inflation back to the 2% target.
- The decision to increase interest rates in September will depend on the aggregate of data since the July meeting.
- At some point, as the policy stance becomes tighter, it may be appropriate to slow the pace of rate hikes.
- Restoring price stability will likely require maintaining a restrictive policy stance ‘for a while’.
- The Fed must continue until the job is done.
- The historical record warns strongly against premature easing of policy.
- The US economy is clearly slowing down, but has strong fundamental momentum.
- The labor market is particularly strong, but unstable; high inflation continued to spread.
- Low inflation readings in July were welcome, but far less than needed for the central bank to be confident that inflation will fall.
- The central bank has committed to smoothing demand to better align with supply.
- The longer high inflation persists, the greater the chances of settling in.
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Chairman Jerome Powell said the Fed’s main focus is to bring inflation back to its 2% target. For this, the US Federal Reserve will have to maintain a restrictive policy for a while. In his statements in Jackson Hole on August 26, Powell also stated that the Fed will not be affected by one or two months of data.
Bitcoin and altcoin markets reaction
In an immediate response to Powell’s comments, the US dollar index remained largely unchanged, maintaining its intraday low range of 107.71. The indicator drops 0.62% during the day. Bitcoin and Ethereum lost more than 3% against the strong stance of the dollar. Ethereum, in particular, had an immediate negative reaction to Powell’s comments, losing more than 7% in the last 24 hours. There was a slight sell-off in the gold market. An ounce of gold continues to trade above $1,735, down 1.3%.
