Federal Reserve Chair Jerome Powell made it clear on Tuesday that the central bank is in no hurry to lower interest rates, emphasizing its commitment to managing inflation. Speaking before the Senate Banking Committee, Powell noted that while inflation has eased, it remains above the Federal Reserve’s 2% target. It reinforces the need for a cautious monetary approach.
Fed Chair Opens Up On Rate Cuts
“The economy remains strong, and our policy stance is already less restrictive than before,” Powell stated. “We do not need to be in a hurry to adjust our policy stance.” He further cautioned that easing policy too quickly could disrupt progress in controlling inflation, while delaying cuts for too long could negatively impact employment and economic growth.
His testimony comes at a time when investors, including those in the cryptocurrency market, have been closely watching for signals of a policy shift. A delay in rate cuts often translates to a stronger U.S. dollar, which tends to exert downward pressure on risk assets like Bitcoin and altcoins. Following Powell’s comments, crypto markets showed mixed reactions, with Bitcoin experiencing slight volatility.
The Fed Chairman also faced scrutiny on banking regulations, with Massachusetts Senator Elizabeth Warren challenging him on consumer financial protections. Warren criticized former President Donald Trump’s decision to halt the Consumer Financial Protection Bureau’s (CFPB) oversight, arguing that it left consumers vulnerable to misconduct by major banks. When asked who was overseeing consumer compliance outside of the CFPB, Powell responded, “I can say no other federal regulator.” However, he reassured lawmakers that the broader banking system remains stable.
The discussion around banking supervision has implications for crypto markets as well, particularly in light of increasing regulatory pressures on digital asset firms. Tighter oversight of traditional financial institutions often extends to the crypto industry, influencing investor sentiment and regulatory uncertainty.
Trade Policies & The Economic Scene
Powell’s testimony also took place against the backdrop of proposed trade tariffs by Trump, who has suggested imposing duties on major U.S. trading partners. While Powell did not directly address the impact of these tariffs in his prepared remarks, he reiterated that fiscal policy decisions, including trade restrictions, fall outside the Fed’s jurisdiction.
The potential implementation of tariffs could affect global markets, indirectly influencing crypto valuations. Economic instability resulting from trade tensions tends to drive demand for alternative assets, including digital currencies. However, if the dollar strengthens further due to prolonged high interest rates, it could limit capital inflows into the crypto sector.
Powell is scheduled to testify before the House Financial Services Committee on Wednesday, where further discussions on monetary policy and financial regulations are expected. Crypto traders and institutional investors will be watching closely for any additional signals on the Fed’s stance regarding future rate adjustments.
Also Read: Bank of America: No Rate Cuts from Fed in 2025?
Source: https://www.cryptonewsz.com/fed-chair-signals-rate-cuts-impact-on-crypto/