Today’s address by Jerome Powell: On Thursday, the chairman of the Federal Reserve testified before the Senate Banking Committee.
US Federal Reserve Chair Jerome Powell addressed the House Financial Services Committee on Wednesday. On Thursday, he appeared before the Senate Banking Committee.
He had ruled out the possibility of interest rate reduction shortly, citing the ‘consistently more persistent’ inflation in the economy. In the meantime, Powell’s speech caused uncertainty in the cryptocurrency market, with Bitcoin’s price hovering just below the $30,000 threshold.
Wednesday, the Fed Chair stated that the current interest rate pause was transitory, as inflation remained elevated. This resulted in a welcoming rebound in the cryptocurrency market.
Jerome Powell Disclaims Rate Cuts
According to comments from Powell’s speech on Thursday, the Fed is unlikely to reduce interest rates until at least 2023, while encouraging indications of a consistent decline in inflation could prompt rate cuts in the latter half of 2024. He lacked confidence in deciding to reduce interest rates in the immediate future.
“We don’t see that (interest rate cuts) happening any time soon. The test for that is that we are confident inflation is moving back down to our two per cent goal. I think by the end of 2024 the median participant would vote for some rate cuts.”
However, he cautioned that it would depend on the state of the economy. He told the committee that the inflation is consistently more persistent than he and other forecasters anticipated.
Therefore, the Fed must wait until the committee is confident that the interest rate is approaching the target level. He added that additional inflation data could signify the possibility of further rate hikes at upcoming meetings.
