According to U.Today, Federal Reserve Chair Jerome Powell recently made comments that have had a significant impact on the cryptocurrency markets. Powell stated that the U.S. economy has not seen inflation return to the central bank's target, suggesting that interest rate cuts are unlikely in the near future. 'The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,' Powell said during a central banking forum. He added that while inflation is still falling, it is not moving fast enough.
Powell's comments marked a change in his stance following a third consecutive month in which a key inflation measure exceeded forecasts. Since July 2023, the Federal Reserve has maintained its benchmark interest rate target range of 5.25%-5.5%, the highest level in 23 years. This was the result of 11 consecutive rate hikes starting in March 2022. Powell indicated that the current policy level might remain in place until inflation approaches the target set. He further stated that unless inflation shows progress, the current level of restriction could be maintained for as long as needed.
The cryptocurrency market reacted to Powell's comments with Bitcoin experiencing fluctuating prices, oscillating between $61,906 and $64,524 in Wednesday's trading session before settling to trade around $62,000. Bitcoin was down 1.13% at press time, trading at $61,440. The global crypto market cap likewise sank 1.84% as the majority of cryptocurrencies suffered losses. The S&P 500 also fluctuated following Powell's speech, briefly falling into the negative before recovering. Financial markets have had to adjust their expectations for rate cuts this year. At the start of 2024, traders in the fed funds futures market anticipated six or seven cuts this year, beginning in March. As the data has progressed, predictions have adjusted to one or two drops, assuming quarter percentage point moves, and this might not begin until September.