Fed Chairman Powell’s speech text today didn’t have many different statements from previous ones, but he made some unexpected announcements. At the time of writing, he touched on CBDCs and many other critical issues. Fed members generally aim to shape their positions in the next 7 days depending on future data.
Remarks by Fed Chairman
Powell did not make a direct statement about cryptocurrencies but said it is too early for a digital fiat currency. He also warned that we might see bankruptcies in small banks. Here are the important headlines from his remarks;
- We are not close to recommending or adopting any kind of central bank digital currency.
- As the labor market cools, we have seen and will see food inflation stabilize.
- The US economy is healthy, growing at a sustainable and robust pace.
- Different types of insurance have recently been a significant source of inflation.
- The housing market is in a very difficult situation. We should see the housing market begin to recover as interest rates and inflation fall, but this will not solve the long-term problem.
- When interest rates normalize, the underlying housing shortage will continue to exert upward pressure on prices.
- If the economy goes as expected, we think that the restrictive policy stance will begin to be carefully lifted within this year.
- I expect bank failures from CRE. However, not big banks, there are smaller and medium-sized banks with the highest risk.
- I think we are in the right place regarding policy. I am waiting to be more certain, we are not far from it.
Fed member Mester also shared her concern that inflation could be persistent this year, although she mentioned that cuts could be made if the economy meets forecasts.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
