Bitcoin and Ethereum Tumble As Fed Chairman Jerome Powell Issues Fresh Economic Warning
Stocks and crypto assets are down across the board in response to the Federal Reserve’s latest policy announcement.
In a new speech at the Fed’s annual meeting, Chairman Jerome Powell says that the Fed’s primary goal is bringing inflation back down to 2% and therefore does not plan to lower interest rates in the short term.
“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.”
Powell acknowledges that Americans are likely to endure economic hardship, but says the Fed’s experience while dealing with inflation in the 1970s and 1980s is guiding current policies.
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.
These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
The chairman explains that public sentiment toward the prospect of further rising inflation in the future is why the Fed feels obligated to not reduce current interest rates, which range between 2.25% to 2.50%.
“The longer the current bout of high inflation continues, the greater the chance that expectations of higher inflation will become entrenched.
[Therefore] we must keep at it until the job is done. History shows that the employment costs of bringing down inflation are likely to increase with delay, as high inflation becomes more entrenched in wage and price setting.”
News of Powell’s speech sent prices across many asset classes tumbling, with stocks, precious metals, and cryptocurrencies all in the red.
Bitcoin (BTC) is down by 3.53% and trading for $20,632 while Ethereum (ETH) is off by 6.17% and priced at $1,572.
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Author: Daily Hodl Staff
