Fed Chair Powell signalled interest rates could end up being higher than expected, sending Bitcoin price lower
The semiannual monetary policy report to the House will be the subject of a hearing this coming Tuesday before the Committee on Banking, Housing, and Urban Affairs. Jerome H. Powell, chair of the Federal Reserve, will testify. The hearing will be broadcast live online in an open session with a hybrid format. During prepared remarks for his visits to Capitol Hill, he hinted that interest rates might turn out to be higher than anticipated, which would cause Bitcoin price and equities to fall. Powell admitted that severe hardships are being caused by rising inflation and that the Federal Reserve is dedicated to getting inflation back to its target of 2%.
Source: Banking.senate.go
He examined the state of the economy and its prospects, emphasizing that while inflation has somewhat subsided, it is still much higher than the Federal Open Market Committee’s target. Powell also discussed monetary policy, emphasizing that the FOMC has kept its stance on monetary policy tight despite inflation being far above its target and the labor market staying tight.
Investors were anticipating Powell’s remarks regarding the Fed’s actions to drive inflation closer to the 2% objective, as the remarks were anticipated to decide the market’s direction shortly. Before the appearance, the price of bitcoin was stable due to investor anxiety over inflation and interest rates, as well as worries about government pressure. Due to his pessimistic comments, the cryptocurrency has now fallen to an intraday low of $22,085 on the Bitstamp platform. At the time of writing, BTC is changing hands at $
BTC/USD 4-hour chart | Source: TradingView
Investors and lawmakers will watch Powell’s testimony for hints as to whether he prefers another 25 basis point rate increase or a more substantial one.
Investors and politicians will be watching Powell’s comments for hints as to whether he supports another 25 basis point rate increase or a more substantial 50 basis point increase at the upcoming Federal Open Market Committee meeting on March 21–22. Powell might reserve judgment until after the next month’s inflation figures and the upcoming jobs report.
The Fed chair will likely be questioned about banking regulations as well. Democrats want the Fed to increase capital requirements for the most prominent institutions, while Republicans want the Fed to treat them more leniently. The Fed’s monetary policy choices caused Bitcoin to perform terribly in 2022. But thus far this year, the tech-heavy NASDAQ, the S&P 500, and the Dow Jones indices have all underperformed Bitcoin.
With a return of over 32% this year, Bitcoin has outperformed gold and the major stock indices. However, the lackluster performance of the cryptocurrency has been associated with worries about increasing regulatory pressure, the collapse of the crypto-friendly bank Silvergate Capital, and rising investor worries about inflation and interest rates.
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