US Fed Speech: Jerome Powell Strengthens Warning on Crypto Industry and Its Turbulence

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This was likely due to “unusually warm weather for the season,” Powell said, adding that if the full data were to indicate that faster tightening is warranted, we would be prepared to pick up the pace of rate hikes.

Powell laid out a series of concerns he has with crypto on Tuesday, and said lenders the regulator oversees need to be very careful “when engaging with it. He added that the central bank does not want prevent innovation.

We don’t want regulation to stifle innovation in a way that only favors incumbents and that sort of thing,” Powell said, quoted by Bloomberg, during a hearing before the Senate Banking Committee, where he added but, like everyone else, were watching what’s going on in the crypto space and what we see is a lot of turmoil, we see fraud, we see a lack of transparency, we see running risks.”

The announcement had an immediate impact on US stocks. Stocks tumble on Wall Street on Tuesday after the head of the Federal Reserve warned it could accelerate interest rate hikes if inflation pressure remains high.

The S&P 500 was down 1.2% in afternoon trading. The Dow Jones Industrial Average fell 460 points, or 1.4%, to 32,970 as of 1:15 p.m. EST, while the Nasdaq composite was down 0.7%.

The Fed has already raised its benchmark policy rate eight times since the start of last year, as it grapples with inflation that has remained stubbornly above its long-term target of 2%. The Fed’s favorite measure of inflation, the personal consumption expenditure price index, hit an annual rate of 5.4% in January.

At the same time, the labor market remains “extremely tight”, Powell said.

“To restore price stability, we will need lower inflation in this sector, and there will most likely be an easing in labor market conditions,” he said.

US job creation jumped unexpectedly in January, while unemployment slipped to its lowest rate in more than five decades, despite efforts to calm the economy.

While wage growth has slowed, analysts say that’s still not enough for the Fed.

A strong labor market supports incomes and therefore demand.

Policymakers worry that high wages will fuel inflation, making it harder to keep prices under control.

Powell’s appearance on Tuesday comes shortly after the U.S. central bank released a semi-annual monetary policy report, which pointed to a tight labor market, robust job gains, historically low unemployment and strong job growth. nominal wages.

Here is the full speech.

Federal Reserve Chairman Jerome Powell is again warning US banks of the risks of getting involved in the digital asset industry.

Powell laid out a series of concerns he has with crypto on Tuesday, and said lenders the regulator oversees need to be very careful “when engaging with it. He added that the central bank does not want prevent innovation.

We don’t want regulation to stifle innovation in a way that only favors incumbents and that sort of thing,” he said during a hearing before the Senate Banking Committee. But, like everyone else, we look at what’s going on in the crypto space and what we see is a lot of turmoil, we see fraud, we see a lack of transparency, we see risk taking.”

European stocks posted their biggest one-day drop in two weeks on Tuesday as investors weighed the prospects of a 50 basis point rate hike by the U.S. Federal Reserve following hawkish remarks from Chairman Jerome Powell.

The pan-European STOXX 600 index closed down 0.8% as real estate and technology stocks were hit hard.

(With agency contributions)

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