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Bitcoin price briefly rose to $59,300 after falling below $56,700 earlier today, according to data from CoinGecko. The recovery came after the US Federal Reserve (Fed) decided to keep interest rates in the range of 525-550 basis points (bp).
In a statement announcing the rate hike, Chairman Powell said the decision to keep interest rates unchanged was due to rising inflation. As he noted, the Fed plans to continue reducing bond sales, but the remaining bonds continue to be sold at the same pace.
“Today, the FOMC decided to keep interest rates unchanged and continue to reduce its securities holdings, albeit at a moderate pace,'' Chairman Powell said. “Recent months have shown that inflation is not making further progress towards the 2% target,” and we continue to pay close attention to inflation risks. ”
Powell pointed to the steady pace of economic expansion, strong job growth and low unemployment, even as inflation remains above the desired 2% target.
“Economic activity continues to expand at a steady pace,” he said. “Job growth remains strong and unemployment remains low. Inflation has eased over the past year but remains high.”
He said inflation has been higher than expected in the short term but is in line with long-term expectations. With these higher-than-expected inflation numbers, central banks remain hesitant to cut interest rates.
The Federal Reserve has indicated that it will maintain high interest rates for a long period of time. However, he said he would consider adjusting the policy if the unemployment rate increases.
Fed chairman: “No stags or flats in sight''
Mr. Powell remained neutral in his speech today, in contrast to previous predictions that he could take a hawkish position.
Responding to a series of questions from the media about the current situation in the world's largest economies, Chairman Powell said further rate hikes were unlikely as current data did not support such hikes. He said the Fed believes current high interest rates are enough to bring inflation back to its 2% target.
Regarding the risk of stagflation, he expressed skepticism about claims that the United States has entered a period of stagflation, characterized by high inflation coupled with economic decline.
Powell says that because inflation will eventually decline, the conditions that define stagflation will not persist and will never fully develop.
“We don't see any 'stag' or 'inflation,'” Powell said. “I really don't understand where that came from,” he added.
Despite Powell's neutral position, Bitcoin, which regained momentum, slumped. It briefly crossed $59,000, but was unable to sustain above this important level. Bitcoin is currently trading at around $57,300, down 3.4% in one hour, according to data from CoinGecko.
Similarly, the top 10 altcoins experienced a modest rally after the Fed decision, rising between 0.5% and 2.5%. However, this short-term rebound quickly disappeared.
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