Bitcoin (BTC) and the crypto markets ticked upward on Friday after U.S. Federal Reserve Chair Jerome Powell appeared to express some reserved optimism about the American economy.
Powell spoke to students at Spelman College in Atlanta about the Fed’s ongoing strategy for dealing with inflation.
The Fed chair says inflation initially sprung up due to a combination of strong demand and pandemic-constrained supply.
“The normalization of supply and demand conditions has played a critical role in the disinflation so far, as has the substantial tightening of monetary policy and overall financial conditions over the past two years.
The strong actions we have taken have moved our policy rate well into restrictive territory, meaning that tight monetary policy is putting downward pressure on economic activity and inflation. Monetary policy is thought to affect economic conditions with a lag, and the full effects of our tightening have likely not yet been felt. The forcefulness of our response to inflation also helped maintain the Fed’s hard-won credibility, ensuring that the public’s expectations of future inflation remain well-anchored.”
Powell notes that the economic impacts of the pandemic are still materializing and acknowledges that uncertainty regarding the economy is “unusually elevated.” The chair says Fed officials are making decisions meeting by meeting.
“Like most forecasters, my colleagues and I anticipate that growth in spending and output will slow over the next year, as the effects of the pandemic and the reopening fade and as restrictive monetary policy weighs on aggregate demand. The FOMC (Federal Open Market Committee) is strongly committed to bringing inflation down to 2% over time, and to keeping policy restrictive until we are confident that inflation is on a path to that objective. It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so.”
Bitcoin is trading at $38,728 at time of writing and is up nearly 3% in the past 24 hours.
The total crypto market cap is also up around 2% in the past day, according to CoinGecko.
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