Federal Reserve chair Jerome Powell said the pace of interest rate rise would depend on incoming data. “We are at the very lowest level of what is restrictive.” The number of job vacancies is twice the number of the unemployed, he said. Powell added that the numbers show how different the current cycle is from other cycles. He was speaking about the overall macroeconomic scenario following the FOMC meet decision to increase interest rate by further 75 bps. Meanwhile, analysts are weighing in on how the fresh rate hike and Jerome Powell comments could impact crypto prices going forward.
Crypto Prices Remains Largely Flat After Fed Rate Hike
Bitcoin (BTC) and other cryptocurrencies have not shown any significant reaction to the fresh interest rate hike. The initial reaction, though, was not in favorable to investors as prices plummeted sharply. It was only later when Jerome Powell made the comments that crypto prices recovered to the normal levels. Taking into account the rising inflation, investments could ideally flow further into the crypto market. But it would also depend on whether the economy is controlling inflation quickly enough or not. Responding to questions of global recession concerns, Powell said the Fed is very aware of what’s happening in other economies.
“Our forecast takes all of that into account — the policy decisions and the economic situation in other countries. It’s hard to talk about collaboration in a world with very different situations. There’s a lot of information sharing on what other economies are doing.”
Is Recession A Possibility?
Asked whether the data is indicating a possibility of recession, Powell said there is a possibility of slow growth. There is a very high likelihood of a period of very slow level of growth, he added. “What we hear from people is that they are suffering from inflation.” He added that there was a need to get rates up to set up the economy for a long period of smooth phase. Our tight focus is now to increase the interest rate in the short term, he added. He emphasized on the need to soften up the labor market to get things right in the economy.
Meanwhile, the crypto assets reacted normally to the Fed rate hike decision. In the last one hour, Bitcoin (BTC) and Ethereum (ETC) jumped by 2.65% and 2.78% respectively. As of writing, BTC price stands at $19,451.18, up 2.23% in the last 24 hours, according to price tracking platform CoinMarketCap.