Fed Chairman Jerome Powell held a press conference after the Fed announced its decision to raise interest rates by 25 basis points to 5%. After Powell’s speech, the Bitcoin price started to decline.
Fed Chairman Jerome Powell speaks
cryptocoin.comAs you can follow, the Federal Reserve increased interest rates by 25 basis points in its last meeting, in line with expectations. After the decision, eyes were turned to the speech of Fed Chairman Jerome Powell. “If we need to raise interest rates, we will,” Powell began. The Fed rate decision and Powell’s determined stance caused a pullback in Bitcoin and altcoins. However, the decline did not deepen and Bitcoin managed to regain this key level again after slumping below $27,000 for a short time.
Here are highlights from Fed chair Jerome Powell’s speech:
- The latest liquidity provision, which increased the size of the balance sheet, aims to change the stance of the monetary policy.
- We don’t see ourselves as someone with a shortage of reserves.
- We are always ready to change if it changes, but so far we have not seen any evidence.
- Our audit team was very involved with the SVB and the escalating issues, but we still need to try to understand how the bank failed.
- The pace of work at the SVB indicates the need for possible regulatory and supervisory changes.
- Interest rate cuts are not our main expectation this year.
- Policy should be tight enough to reduce inflation, some of this tightness may come from credit conditions.
- At the end of the day, we will do enough to bring inflation down to 2 percent.
- We are well aware of the concentrations in commercial real estate.
- I don’t think this is comparable to other types of banking.
- We are 100% confident that external inquiries will be made at SVB, and we welcome them.
- I welcome all inquiries into this banking failure.
- The fiscal impulse is not currently driving inflation.
The story about inflation is intact
Fed Chairman Jerome Powell gave the following clues regarding the outlook for inflation and the course the Fed will follow:
- Goods inflation is falling, albeit more slowly than we would like.
- There is still no improvement in non-residential services.
- It’s just something that should come with the softening of demand and working conditions.
- We do not yet see progress in core services inflation, excluding housing.
- However, inflation data pointed to stronger inflation.
- We do not know the extent of the impact of tighter credit conditions.
- We do not know how significant or permanent the impact of this credit tightening will be.
- That said, we think it’s pretty real.
- This suggests that we need to be on the alert when we consider further rate increases.
- Tightening credit terms may mean that monetary tightening has less work to do.
- The last two weeks will put pressure on demand and inflation.
- The need for further hikes will depend in particular on the actual and anticipated effects of the credit tightening.
- The focus was on the words “could” and “somewhat” as opposed to “ongoing” increases.
- Our statement sought to reflect the uncertainty in the outlook stemming from banking pressures.
- It is possible that banking stress will decrease and we have more work to do; the opposite may also be true.
- Possible tightening in credit terms could mean that monetary tightening has less work to do.
- We really focused on potential credit tightening and what it could produce.
- With banks, we focused on our financial stability instruments.
- At the meeting, I heard that a significant number of people expected tightening of credit conditions.
- This was included in their projections.
- Therefore, they included this forecast in their estimates for tighter loan terms.
- But the banking problems are so new, there is so much uncertainty.
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