Fed Chair Jerome Powell states inflation pressure runs high, Bitcoin price falls below $27,500
|- Federal Reserve Chair Jerome Powell, during the FOMC press conference, stated that inflation coming down has a long way to go.
- Powell addresses the ongoing banking crisis in the United States, saying the Fed thinks recent banking events will result in tighter credit conditions.
- The crypto market was expected to take a bullish stance following the 25 bps “dovish hike”, however, Bitcoin price fell below $27,500 soon after.
During a press conference following the 25 basis points hike, Federal Reserve Chair Jerome stated that the Fed is going to continue reducing its balance sheet and will closely monitor incoming data, actual and expected effects of tighter credit conditions.
Talking about the banking conditions in the United States, the Fed chair stated that the recent banking event, i.e., the shuttering of Silicon Valley Bank, Signature Bank and Silvergate Bank, will lead to tighter credit conditions.
The comments came after the Fed, in its policy statement of the interest rate hike earlier, noted that “the U.S. banking system is sound and resilient”. Powell further stated,
“We are undertaking thorough review to see if we need to strengthen regulation.”
During the press conference, Powell also added that at the Federal Open Market Committee (FOMC) meeting, he heard a significant number of people anticipating tightening credit conditions. This, according to Powell, might mean that the monetary tightening has lesser work to do.
Powell further stated that the inflation is still above the goal of 2% and that the pressure continues to run high, looking at the recent inflation readings. He added that the process of getting the inflation down still has a long way to go and that it would be bumpy.
Further discussing inflation Powell noted that long-term inflation expectations remain well anchored and that the decisions going forward will be taken meeting by meeting.
The crypto market digests Fed decision
Over the last few days, Bitcoin price noted a significant rally, which indicated that the biggest cryptocurrency had decoupled itself from the broader economic conditions. As a result, the 25 bps rate hike was expected to push BTC towards $30,000, consequently resulting in the crypto prices rising.
BTC/USD 1-hour chart
However, at the time of writing, following Powell’s remarks, the Bitcoin price declined by more than 4% to bring the cryptocurrency to trade at $27,500. This is converse to the initial reaction where BTC noted a spike to $28,870. Going forward, the crypto asset could witness some volatility but is expected to maintain its presence above the $27,000 mark to avert panic in the market.
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