Federal Reserve Chair Jerome Powell attended Capitol Hill today for the first day of his semiannual testimony on monetary policy. Addressing a panel of Congressional senate lawmakers, he assured that the central bank is committed to lowering inflation and would use all means to achieve this goal.

Fed To Continue Rate Hikes

Powell made it amply clear that the Federal Reserve would maintain its campaign of rate hikes until it saw clear indicators that inflation was heading towards the Fed’s target of 2%. In addition to vowing to fight inflation, Powell emphasized that the overall state of the economy is positive, with a robust labor market and consistently rising demand.

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Powell stated that inflation has been well above the 2 percent target, and with the labor market continuing to remain extremely tight, the Federal Open Market Committee (FOMC) has continued to tighten the stance of monetary policy, raising interest rates by 4-1/2 percentage points over the course of the past year.

While talking about reducing inflation and subsequently increasing the interest rates, Powell was quoted as saying:

Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time.

In order to achieve a posture of monetary policy that is sufficiently restrictive to bring inflation back down to 2 percent over time, the Federal Reserve will continue to anticipate that further increases in the target range for the federal funds rate will be appropriate. In addition to that, the government body is working hard to reduce the total size of its balance sheet by a substantial amount right now.

Powell’s Core Focus On Inflation

The chair of the Federal Reserve stressed the need of reestablishing price stability, which would in turn pave the way for maximizing employment and maintaining price stability over the longer term. Additionally, it was pointed out that historical evidence strongly advises against relaxing restrictions before it is appropriate to do so. “We will stay the course until the job is done”, Powell added.

Powell will next participate in a question-and-answer session with senators from the United States once they have heard his statement. In response to this news, the stock market in the United States experienced a decline, with key indexes such as the S&P 500, Dow Jones, and Nasdaq 100 all falling by approximately 1%. The cryptocurrency market suffered losses as well, with Bitcoin’s price falling by 1.8% in the last hour and currently trading close to the $22,000 mark at the time of writing.

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The post Breaking: Fed Chair Testifies At U.S. Hearing, Says “Can Speed Up Rate Hikes If Needed” appeared first on CoinGape.

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Filed under: News - @ March 7, 2023 3:22 pm