Jerome Powell’s Hawkish Speech At Jackson Hole, The Markets Swung Back And Forth

On Friday, cryptocurrency values fluctuated as Fed chair Powell discussed the negative effects of inflation.

In the hour before the speech, cryptocurrency values increased; at one point, bitcoin was trading just above $21,800, and ether was trading above $1,700. Prices fell as the Fed chair shared the median interest rate forecasts of his colleagues, which were slightly under 4% until the end of the year. At time writing, Bitcoin price is $21,286.

“While the lower inflation readings for July are welcome, a single month’s improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down” Powell said.

He then went on to add that the Fed’s decision in September will depend on the “totality of the incoming data and the evolving outlook.”

From a more than 40-year high of 9.1% in June, the US annual inflation rate dropped to 8.5% in July. That fell short of market expectations of 8.7%. According to data released yesterday, the US GDP shrank by 0.6% during the second quarter. This was superior to predictions of -0.7%.

According to Jack Neureuter, research analyst at Fidelity Digital Assets, an active stance against inflation has been and probably will continue to be a short-term drag on all risk assets, including digital assets.

Powell warned households and businesses will feel the pain

“If there is growing evidence that inflation has peaked, then it’s likely that longer-dated interest rates would fall substantially from their current levels – serving as a possible catalyst for both risk assets and relatively looser financial conditions” Neureuter said.

On Thursday, Esther George, the president of the Kansas City Fed, made additional interesting comments. She told Bloomberg TV that rates may eventually rise over 4%. To reduce demand and bring inflation back to our aim, George remarked, “We must raise interest rates.”

Every year, central bankers, finance ministers, academics, and other market participants from across the world gather in Wyoming for the Jackson Hole conference. Reassessing economic and policy limits is the conference theme for 2022.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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