At the San Francisco conference, Jerome Powell confirmed that interest rates would remain unchanged until the inflationary situation improves. This announcement weighs on the crypto market, with Bitcoin having fallen by 1.35% in one hour.
The Fed inflexible on rates
The verdict is in: the Fed will maintain rates at the current level as long as inflation does not show tangible signs of deceleration. Jerome Powell wanted to be firm, insisting that this restrictive policy will remain in place “longer” if the situation requires it. An unambiguous message which reflects the central bank's absolute priority: stemming the rise in prices.
This determination of the Fed to give up nothing puts the cryptocurrency market under lasting pressure. Deprived of the prospect of monetary easing, bitcoin is seeing its horizon darken. Investors understand that the tightening of financing conditions will weigh on risky assets for a long time, limiting the rebound potential of the king of cryptos.
With an inflexible Fed, the evolution of bitcoin will more than ever play out on the terrain of inflation. The next publications of the PCE price index will be decisive.
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