In a hearing on March 3, it was made fed-Jerome Powell, CEO, strongly in favor of a 0.25 percentage point rate hike in March. However, high inflation data and a weakening economy continue to give the Fed headaches. It is still not entirely clear how many interest rate hikes there will be this year.
Nightmare for the Fed
With usual calm, US Federal Reserve Chairman Jerome Powell responded yesterday to questions about the central bank’s current policy in front of the US Congress. However, the 69-year-old lawyer He is not to be envied for his work at this point, as the Fed seems to have gotten itself into a quandary. If you don’t raise interest rates fast enough, you risk inflation running too high. On the other hand, there is a risk that raising interest rates too quickly will plunge the economy into a recession. The Atlanta Federal Reserve is particularly bearish. This assumes that growth will be practically zero in the current quarter (see Figure 1, green curve).
Also, due to the war in Ukraine, energy prices are also increasing tremendously. These increases in the prices of raw materials not only make home heating more expensive, but also affect the manufacturing industry, especially the food industry (keyword: increase in fertilizer prices). Ultimately, this mixed situation could result in an acceleration of the inflationary spiral.
Jerome Powell, however, sees it differently. As he told the US Congress, he expects inflation to peak soon and “reduce” by the end of this year.
In January, US inflation rose 7.5 percent year-on-year, BTC-ECHO reported. After the Fed previously announced a much tighter monetary policy starting in March, the market praised even quicker and tighter action by the Fed after these record inflation data. The US investment bank JPMorgan meanwhile, he even expects the US Federal Reserve to raise interest rates for nine consecutive meetings.
“More than a reserve currency”
One comment, however, caused a stir. In his speech, the 69-year-old stressed that there could be more than one reserve currency besides the US dollar. He later added that there were times when that was the case (see tweet below).
It is unclear whether the chairman of the US Federal Reserve is thinking of Bitcoin, gold, or another fiat currency. However, the statement was celebrated among so-called “Bitcoin maximalists.”, as if it were already a “yes” for Bitcoin. Well-known crypto investor and media star Anthony Pompliano, Pompliano for short, wrote on Twitter that this had happened faster than he expected (see tweet below).
At the same time, Powell recalled the need for regulation in the crypto space.
We are dealing with an emerging industry here, made up of many parts, and there is not the kind of regulatory framework that there should be.. (The conflict between Ukraine and Russia) has underscored the need for congressional action in the area of digital finance, including cryptocurrencies.
Jerome Powell, Source: CNBC
Even if Powell’s statement made waves in the crypto space, in the context of the criticism, it seemed quite unlikely that Powell was referring to Bitcoin.
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