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Bitcoin and Ethereum Tumble as Fed Chair Jerome Powell Issues New Economic Warning – The Daily Hodl

Stocks and crypto assets have fallen across the board in response to the Federal Reserve’s latest policy announcement.

In a new speech at the Fed’s annual meeting, Chairman Jerome Powell says the Fed’s primary goal is to bring inflation down to 2% and therefore has no intention of cutting interest rates in the near term.

“To restore price stability, restrictive policies will probably have to be maintained for some time. The historical record strongly warns against a premature easing of the policy.”

Powell acknowledges that Americans are likely to weather economic adversity, but says the Fed’s experience dealing with inflation in the 1970s and 1980s guides current policy.

“While higher interest rates, slower growth and softer labor market conditions will bring inflation down, they will also hurt households and businesses.

These are the unfortunate costs of curbing inflation. But if price stability is not restored, it would mean much more pain.”

The chairman explained that public opinion about the prospect of further rising inflation in the future is why the Fed feels obliged not to lower current interest rates, which are between 2.25% and 2.50%.

“The longer the current period of high inflation lasts, the more likely expectations of higher inflation become entrenched.

[Therefore] we have to keep going until the work is done. History shows that labor costs to curb inflation are likely to increase with a lag as high inflation becomes more entrenched in wage and price formation.”

News of Powell’s speech sent prices tumbling across many asset classes, with stocks, precious metals and cryptocurrencies all in the red.

Bitcoin (BTC) is down 3.53% and is trading at $20,632 while Ethereum (ETH) is 6.17% lower and priced at $1,572.

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Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making any risky investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and transactions are at your own risk and any losses are your sole responsibility. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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