Fed Chairman Jerome Powell speaks to a monetary policy panel at a US central bank employees research conference in Washington.
Here are excerpts from Powell's speech:
- Due to the tightening bank loan conditions, the policy rate may not need to rise as much as it normally would.
- Inflation is well above the Fed's target. Price stability is the foundation of a strong economy and it is the responsibility of the central bank to maintain it. Failure to reduce inflation will prolong the problem.
- The Fed is determined to return to the 2% inflation target. High inflation poses serious challenges.
- The US banking system is strong and resilient.
- We have separate tools for monetary policy and fiscal oversight. FED's instruments are often complementary to each other, sustainable price stability depends on a stable financial system.
- It is possible that supply shocks will continue, but this is difficult to predict. Positive supply shocks experienced during the globalization process may have helped to keep inflation low.
- Developments in the banking sector mean that the policy rate may not need to rise too high to meet policy targets.
- For policy makers, central banks remain responsible for price stability regardless of supply shocks.
***The news is constantly updated during Powell's speech.
The initial reaction of the Bitcoin (BTC) price during Powell's speech was as follows:
Jerome Powell and FED to Determine Next Rate Decision on 13-14 June
Bitcoin and cryptocurrency investors may perhaps breathe a sigh of relief if, as many traders and analysts expect, the Fed chooses not to raise interest rates at next month's policy meeting.
But U.S. central bank officials are still undecided on whether to pause the 14-month tightening cycle, whether it will be a prolonged pause in aggressive rate hikes or just a "jump" to give the economy a breather, and further borrowing cost increases soon if inflation doesn't fall. They began to have new ideas about whether he would come or not.
Uncertainty remains about the possibility of a rate hike by the FED at its meeting on 13-14 June and how policymakers will explain their decision not to raise interest rates.
Raphael Bostic, president of the Atlanta Fed, reflected on the current mood, saying earlier this week that even this decision won't say much about the future, although he "tends" to keep interest rates steady at the June meeting:
“I would say it's a pause, but this pause can be a 'jump' or a wait,
There is so much uncertainty in the world. We're going to have to see how things unfold and figure out what's real signal and what's noise, and that's something that will change from week to week.”
The quarter-point rate hike approved by the FED earlier this month was the tenth increase in a row since March 2022, pushing the benchmark policy rate to the 5.00-5.25% range, the level most policymakers identify as the likely stopping point for rate hikes.
*Not investment advice.
