- Federal Reserve Chairman Jerome Powell said on Wednesday that the central bank is willing to lower the inflation rate to the target of 2%.
- Powell said that inflation has “slowed down a bit” but high inflation pressures continue and acknowledged that it will take a long way to bring inflation back to the 2% target.
- Powell stated that they have not made any decisions on interest rate hikes in July 2023 and announced that the central bank will continue to make decisions from meeting to meeting.
Following the announcement of the critical Fed decision, Jerome Powell held a press conference. Afterwards, selling pressure on BTC increased.
Fed Chairman Speaks at Press Conference
Federal Reserve Chairman Jerome Powell said on Wednesday that the central bank is willing to lower the inflation rate to the target of 2%. He stated that almost all policymakers believe that there will be a need for several interest rate hikes in the coming months. He made these statements at the press conference he held following the decision to stop the interest rate hike. While Fed officials found it appropriate not to change the interest rate in the current range of 5-5.25%, they indicated that interest rate hikes may be possible for the rest of 2023.
Powell said that inflation has “slowed down a bit” but high inflation pressures continue and acknowledged that it will take a long way to bring inflation back to the 2% target. At the end of 2023, Federal Reserve officials projected inflation to be 3.2% and 2.5% at the end of 2024, compared to the central bank’s target inflation rate of 2%. On the other hand, officials expect core inflation to be 2.6% at the end of 2023 and 2.3% at the end of 2024.
Fed officials warned that despite cooling inflation and current ranges, the central bank may have completed interest rate hikes. This could increase uncertainty in the market by the end of 2023 and allow investors to prefer risky assets in the crypto market, which could benefit Bitcoin. Interestingly, most Fed officials predict interest rate cuts in 2024. Powell stated that they have not made any decisions on interest rate hikes in July 2023 and announced that the central bank will continue to make decisions from meeting to meeting.
Excerpts from Fed Chairman Jerome Powell’s speech:
- An economy without price stability benefits no one. We are strongly committed to the 2% inflation target.
- All policymakers see more interest rate hikes as appropriate this year.
- Inflation is well above the 2% target. We have a long way to go to bring inflation back to 2%.
- Fed’s interest rate projections are not a decision or a plan. We will make decisions at meetings. We have not made a decision for the July meeting.
- We are not far from the target for Fed’s interest rates.
Bitcoin Price After Powell’s Speech
Powell’s speech lasted about 1 hour. During the speech, the BTC price was trading between $25,800 and $26,000. Shortly after the end of the speech, the US stock markets closed and a sudden drop in the price of Bitcoin began.
The BTC price first showed a decline of 1.80% to $25,402. Then the price dropped further and touched $24,820. The percentage equivalent of this drop, which started around $25,870, is approximately 4.1%. Bitcoin has shown a slight recovery so far, but the price is trading around $25,100. Before Fed Chairman Powell’s speech, Bitcoin was around $25,880.
