After the FED’s announcement of a 25 basis point rate hike, which did not come as a surprise, FED Chairman Jerome Powell is holding a press conference.
- After that, we will follow the data and take steps and tighten our monetary policy if necessary.
- Inflation has started to slow down since the middle of last year, but the road to our 2% target is long.
- We think that we will see the temporary effects of interest rate hikes on inflation.
- No suspension decision was made today
- We will determine the interest rate at the meeting.
- Question: Will there be a rate hike in June? Powell: No suspension decision was made today. We will look at the data we have and decide from meeting to meeting.
- Powell: Institution officials generally predict a moderate recession, but my prediction is for moderate growth, not a recession.
- We will revisit our estimates of what the interest rate peak is in June.
- From now on we will take a data-driven approach
- There are some signs that supply and demand are rebalancing in the labor market.
- Wage growth showed some signs of easing.
- Inflation pressures continue to be high.
- We do not have an agenda for further bank consolidation.
- Bank consolidation has been going on for some time.
- It is not possible to say with confidence whether a sufficiently restrictive level has been reached.
- In principle, we won’t need to raise interest rates that much.
- More data will be required before we can declare that we have reached a sufficiently restrictive stance.
- We try to reach and then maintain a sufficiently restrictive stance to lower inflation.
- Our policy is quite strict.
- We’re probably at a sufficiently restrictive level, we might not be too far away.
- Actual rates are around 2%, which is significantly higher than the neutral rate.
- It takes several months of data to show that the Fed’s moves are correct.
- Our target will always be 2% inflation
- We believe that we will have to dwell on this issue for a while.
- Wages are still higher than the 2% inflation rate over time.
- We can avoid a recession.
- Powell said not going into a recession is more likely than not, and that if there is a recession they will “hope it to be moderate”.
Powell: From now on, we will follow the data, take steps and tighten our monetary policy if necessary. pic.twitter.com/oUQzFtpkrU
— Bitcoin System (@bitcoinsystem) May 3, 2023
During Jerome Powell’s speech Bitcoin (BTC) price movements:
With the interest rate decision announced at 21:00 CET, the FED increased the interest rates for the 10th time in a row, reaching the highest level since 2007.
The latest measures taken by the FED against inflation mainly focus on raising interest rates, which is the cost of borrowing. By making money more expensive, the Fed hopes to reduce demand for goods and services, thereby slowing the rise in prices.
The Fed’s rate hikes are motivated by its dual purpose of maintaining price stability and maximum employment. The Fed is targeting an annual inflation rate of 2%, but inflation has been well above this level for months.
*Not investment advice.
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