Fed Chairman’s Speech Sparks Muted Crypto Response

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Federal Reserve Chairman Jerome Powell emphasized the need for central bank independence from political influence in a recent speech.

Powell made the remarks during a panel discussion on the subject hosted by Sweden’s central bank, Sveriges Riksbank. The event hosted central bankers from around the world, including Bank of England Governor Andrew Bailey and European Central Bank member Isabel Schnabel. Powell’s statement consisted primarily of reasons why the institution must remain free from political influence and its corresponding accountability.

The Fed is not a ‘climate maker’

Powell recalled that the two main objectives of the Federal Reserve are to maintain price stability and to achieve maximum employment. While the job market remains robust, the Fed has had to aggressively raise interest rates in order to contain inflation. Because these tough choices are widely unpopular with voting consumers, Powell stressed that they must remain immune to short-term political considerations.

Restoring price stability when inflation is high may require measures that are not popular in the short term, as we raise interest rates to slow the economy, Powell said. The lack of direct political control over our decisions allows us to take these necessary steps without regard to short-term political factors.

Although necessary, Powell went on to say that such an arrangement should be rare in a democratic society like the United States. Therefore, the Fed must demonstrate that it takes this responsibility seriously by adhering to its mandate as closely as possible.

Powell concluded by responding to criticism of the institutions’ position on climate change. He said the Fed is not a climate decision maker and such decisions should be made by the people through their elected representatives.

As markets searched for details on future Fed decisions, Powell’s remarks were clearly devoid of any hints. The absence of any other rate hike indicators prompted a relatively benign response from the crypto markets. Bitcoin and Ethereum rose 0.27% and 0.33% respectively, an hour after Powells’ statement.

Source: Coin360Dimon intervenes

Although Powell neglected to mention interest rate hikes, JPMorgan CEO Jamie Dimon recently provided some guidance on the Fed’s next move. Dimon told CNBC that the Fed’s rate hikes may need to exceed current expectations, which currently sit at around 5-6%. He even gave the prospect of a possible rise to 5% or 6% a chance.

Although it may be necessary to exceed these figures, Dimon prefers to pause to see the full impact of the increases of recent years. I think that may not be enough, Dimon said. We were a bit slow to start. It caught up. I don’t think there’s any harm in waiting three or six months.

Disclaimer

BeInCrypto has reached out to a company or individual involved in the story for an official statement on recent developments, but has yet to receive a response.

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