Crypto Market Fumbles Amid Interest Rate Hike Hints by Fed Chair

• Powell noted that the economy is in good shape overall.
• The chairman mentioned cryptocurrencies and the current instability in the sector.

Today was the first day of Federal Reserve Chair Jerome Powell’s semiannual hearing on monetary policy. Talking to a group of senators, he told them that the Fed is determined to get inflation down and would do everything it takes to make that happen.

It was made quite plain by Powell that the Federal Reserve would continue its campaign of rate rises until it saw clear evidence that inflation was going near the Fed’s objective of 2%. Powell noted that the economy is in good shape overall, with a growing job market and steady increases in consumer demand, and vowed to combat inflation.

Aiming to Bring Inflation to 2%

According to Powell, the Federal Open Market Committee (FOMC) has maintained to intensify the stance of monetary policy by increasing interest rates by 4.50 percentage points over the previous year due to inflation being far over the 2 percent objective and the labor market being extraordinarily tight.

The Federal Reserve still believes that further increases to the target range for the federal funds rate are warranted in order to establish a monetary policy stance that is sufficiently restrictive to return inflation to 2 percent over time. In addition, the government agency is now engaged in intensive efforts to significantly shrink the size of its balance sheet.

Powell mentioned cryptocurrencies and the current instability in the sector in his Capitol Hill address, saying that they are monitoring the industry carefully. Bitcoin’s price dropped 1.4% in the last 24 hours and is trading at the $22,300 level as of the time of writing, reflecting losses throughout the crypto market.