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In recent comments that caught the attention of the crypto market, Federal Reserve Chairman Jerome Powell said that the US economy does not see a recovery in inflation as the central bank's goal, indicating that interest rate cuts are unlikely to occur anytime soon. He said it shows.
“Recent statistics clearly do not give us more confidence and instead indicate that achieving that confidence is likely to take longer than expected,” Powell said at a central bank forum. said. The Fed chair added that inflation is still falling, but not fast enough.
Powell echoed recent statements from central bank officials in suggesting that current policy levels may remain in place until inflation approaches established targets. He also said that current levels of restrictions could remain in place for as long as necessary, unless there is evidence of further inflation.
Powell's comments signaled a change in his stance after key inflation indicators came in better than expected for the third consecutive month.
Starting in July 2023, the Federal Reserve has maintained its benchmark interest rate target range at 5.25%-5.5%, the highest level in 23 years. This was the result of the 11th consecutive rate hike starting in March 2022.
Cryptocurrency market reaction
Bitcoin saw a see-saw price movement during Wednesday's trading session, fluctuating between $61,906 and $64,524 before settling around $62,000. Bitcoin (BTC) was down 1.13% at the time of writing, trading at $61,440.
The global crypto market capitalization similarly fell by 1.84% as the majority of cryptocurrencies suffered losses.
The S&P 500 similarly fluctuated after Powell's speech, briefly going into negative territory before recovering.
Financial markets are being forced to adjust their expectations for interest rate cuts this year. In early 2024, traders in the federal funds futures market expected six or seven rate cuts starting in March of this year.
As the data evolves, the forecast has been adjusted to a 1-2 decline, assuming a change of one-quarter of a percentage point, which may not begin until September.
