Fed Chair Powell Signals Cautious Approach on Rates as U.S. Inflation Nears Target

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As a seasoned crypto investor with over a decade of market navigation under my belt, I must admit that deciphering the dance between traditional markets and digital assets has become somewhat of a symphony to me. Yesterday’s speech by Federal Reserve Chair Jerome Powell sent ripples through both realms, causing a momentary drop in the prices of Bitcoin, Ethereum, and Solana, while XRP managed to buck the trend with an impressive surge.

Yesterday, Jerome Powell, Chair of the Federal Reserve, spoke at an event hosted by the World Affairs Council, the Federal Reserve Bank of Dallas, and the Dallas Regional Chamber. In his address, he discussed the economic forecast and monetary policy. Powell conveyed a positive view of the U.S. economy’s current condition while urging caution when making future adjustments to monetary policy.

As a crypto investor, I’ve been closely monitoring the U.S. economy, and it’s clear that we’ve made a remarkable comeback from the global pandemic’s challenges. Currently, our economy is in a robust state, with the GDP growing by more than 3% last year, and a steady growth pace of around 2.5% this year.

As a researcher, I’ve noticed a shift in the job market dynamics, with conditions cooling down from their overheated state of previous years, moving towards more balanced levels. Currently, the number of job openings is almost equivalent to the number of unemployed individuals actively seeking employment, indicating a market closer to equilibrium. While the unemployment rate has risen slightly to 4.1%, it’s important to note that it has stabilized in recent months and remains comparatively low based on historical data. Additionally, wage growth, though moderated, is still maintaining a steady and sustainable pace.

Regarding inflation reduction, Powell pointed out that a slowing labor market coupled with better supply conditions have played a significant role in reducing inflation rates noticeably. He mentioned that inflation had surpassed 7% in mid-2022 but has since seen a substantial decrease. As per the latest figures, consumer expenditure prices, as measured by PCE, went up by 2.3% over the year ending October. Meanwhile, core PCE prices, which don’t include food and energy costs, climbed by 2.8%. Powell expressed optimism that inflation is now approaching the Fed’s target of 2%, but emphasized that more progress is needed to fully achieve this goal.

Regarding monetary policy, Powell disclosed that the Federal Open Market Committee (FOMC) has lowered the policy interest rate by 0.25 percentage points. He clarified that the Fed is moving towards a more neutral position in its policy, taking great care to ensure it doesn’t interfere with the economy’s momentum. Powell emphasized the importance of finding the right balance between controlling inflation and preserving economic and labor market health. He underscored that while the economy remains robust, the Fed is not rushing to make additional rate cuts. Any future modifications, he noted, will be based on data and will take into account changing economic conditions and risks.

Powell reinforced once more the Federal Reserve’s dedication to fulfilling its twofold objective, which involves promoting full employment and maintaining price stability. He highlighted that the Fed intends to bring inflation back to its desired level without triggering a spike in joblessness. In conclusion, he acknowledged the notable advancements but also stressed that the goal remains only partially achieved.

After the speech concluded, cryptocurrency prices began falling; currently (within the last 24 hours), Bitcoin, Ethereum, and Solana have decreased by 1.6%, 3.4%, and 4% respectively. In contrast, XRP is the only significant digital currency that has defied this trend, experiencing a substantial increase of 14%, trading at $0.8105. Some crypto experts and influencers attribute this surge to recent statements made by U.S. SEC chair Gary Gensler, which they believe may indicate his impending resignation.

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2024-11-15 13:10