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Bitcoin Trades Neutral As Fed Chair Powell Speaks

Bitcoin rose to $39,000 right after the release of the Federal Open Market Committee statement declaring interest rates to remain unchanged, but quickly returned to neutral territory trading when Federal Reserve Chairman Jerome Powell went live during a press conference on the future of US monetary policy Powell reiterated that the committee’s focus is on maintaining a strong labor market and curbing inflationary pressures, the two main drivers of the FOMC’s monetary policy. Inflation has soared over the past year as supply-demand imbalances and increased liquidity in the market have kept prices well above the commission’s long-term target of 2% on average. Despite a “very, very strong” job market, Powell has said inflationary pressures have kept the Fed on alert as they try to contain prices. Powell added that inflation has been above target and for a longer period of time than expected, leading to a likely more aggressive set of policy measures. Powell said the committee has not yet decided at what pace or level the rate hikes will happen, something he said will likely be discussed in more depth at the next meeting in March, but stressed the focus of monetary policy this year is to curb inflation, even if it means a slowdown in growth. The Fed chairman assured that the labor market is expected to remain strong even after the implementation of tighter monetary policy. When asked whether the Fed and the commission are concerned about the harsher effect inflation is having on lower-income households, Powell replied that inflation hurts everyone. Americans, regardless of income, however, recognized that those who live paycheck to paycheck may be hit harder because their purchases are more focused on basic necessities for which prices are skyrocketing. “Everything we do is in the public interest,” Powell said. In recent years, American citizens have heard Powell reassure them that the central bank is doing everything it can to ensure a prosperous economy and job market, but they have seen little result. Inflation has risen to a 40-year high as the Fed blames supply-side constraints on continued price increases, while adopting a highly accommodative policy to increase liquidity in the market. The inability to contain inflationary pressures effectively has caused some Americans to reconsider their confidence in their central bank and its power to ensure a healthy economy, a story Powell joins at every meeting. Bitcoin offers everyone the opportunity to opt out of a broken financial system developed by central banks that usually does not secure the interests of the people as it is plagued by irresponsible credit expansion and superficial growth. Unexpected supply-side inefficiencies certainly play a role, but that’s only part of the equation. Bitcoin is the only lifeboat available to escape a system that has failed time and again to protect people’s purchasing power and promote a well-functioning economy. “We don’t really know how this will go,” Powell said, referring to the commission’s monetary policy intentions and their unpredictable outcomes at the end of the livestream.
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