Federal Reserve Chairman Jerome Powell was on Capitol Hill today for the first day of his semiannual testimony on monetary policy. Addressing a panel of legislators from the Congressional Senate, he assured that the central bank is committed to lowering inflation and would use all means to achieve this goal.
Fed continues with rate hikes
Powell made it abundantly clear that the Federal Reserve would continue its campaign of rate hikes until she saw clear indicators that inflation was moving towards the Fed’s target of 2%. In addition to vowing to fight inflation, Powell stressed that the overall state of the economy is positive, with a robust labor market and demand constantly rising.
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Powell stated that inflation is well above the 2 percent target, the labor market remains extremely tight, and that the Federal Open Market Committee (FOMC) has further tightened monetary policy by raising interest rates 4-1. 2 percentage points over the past year.
While talking about reducing inflation and then raising interest rates, Powell was quoted as saying:
To restore price stability, we will probably have to pursue a restrictive monetary policy for some time.
To maintain monetary policy restrictive enough to bring inflation back to 2 percent over time, the Federal Reserve will continue to anticipate further increases in the target range for the federal funds rate. In addition, the government body is currently working hard to substantially reduce the total size of its balance sheet.
Powell’s core focus on inflation
The Chairman of the Federal Reserve stressed the need to restore price stability, which in turn would pave the way for maximizing employment and maintaining price stability over the longer term. In addition, it was pointed out that historical evidence strongly advises against relaxing restrictions before it is appropriate to do so. “We will stay on track until the job is done,” Powell added.
Powell also brought up cryptocurrency in his speech on Capitol Hill, stating that they are “closely watching” the space due to the ongoing unrest taking place there.
Powell will then participate in a question-and-answer session with United States senators once they hear his closing statement. In response to this news, the US stock market took a downturn, with major indices such as the S&P 500, Dow Jones and Nasdaq 100 all falling by around 1%. The crypto market also took losses, with Bitcoin’s price falling 1.8% in the past hour and trading around $22,000 at the time of writing.
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