Jerome Powell, chairman of the Federal Reserve (Fed), the central bank of the United States, was optimistic about the economy today, after announcing a cut in interest rates.
“Our economy is strong overall and has made significant progress toward our goals over the past 2 years,” express. Inflation has been falling in the economic powerhouseas the chart below shows, although it has not yet reached its 2% target and the labor market has cooled, it deepened.
Annual inflation in the United States in September was 2.5%. Source: Investing.
“We are committed to maintaining the strength of our economy by supporting maximum employment and returning inflation to our 2% target,” he said.
The official spoke these words in a speech he gave half an hour after the Fed Bitcoin-reacciona-alta-volatilidad/” target=”_blank” rel=”noreferrer noopener”>will announce a reduction in rates from 0.5% to 5%. This is the first cut in more than four years since the Covid-19 pandemicwhich puts an end to aggressive monetary policy.
As seen below, rates were at 5.5% more than a year ago, their highest level in two decades. “Our tight monetary policy helped restore the balance between supply and demand, easing inflationary pressures,” Powell said.
Interest rates in the United States. Source: Investing.
“This decision reflects our growing confidence that, with appropriate calibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably to 2%,” he said of the rate cut.
Fed chief assures that “the labor market is not a source of high inflationary pressures”In fact, he noted that a set of indicators suggest that conditions in the labor market are less tight than just before the pandemic, even though it has declined.
The Fed expects to continue cutting interest rates
“We know that reducing policy constraints too quickly could hamper progress on inflation, while reducing constraints too slowly could unduly weaken economic activity,” he said. Although they expect to continue making rate cuts, they did not anticipate when, or how much..
“We will continue to make our decisions meeting after meeting,” he said regarding the definition of monetary policy. The next rate setting sessions are on November 7 and December 18. “The things we do will depend on how the economy evolves,” he added.
Regarding his projections, Powell stressed that, with an appropriate recalibration of monetary policy, They see that the economy is growing and that will support the labor market“We remain committed to supporting maximum employment and reducing inflation,” he insisted.
“If we look at the data on economic activity growth, the retail sales data that we just received, the gross domestic product (GDP) for the second quarter, all of this indicates an economy that continues to grow at a solid pace, so that should also support the labor market over time,” he concluded.
Thus, Fed chairman eases recession fears due to the slowdown in employment in the economic powerhouse. As a result, both stock and equity markets bitcoin (BTC) and cryptocurrencies They reacted on the rise initially.
The rate cut lowers borrowing costs and increases liquidity, thus motivating demand in risk markets. That explains its reaction with high volatility. As CriptoNoticias reported, Upcoming employment data are expected to shed more light on economic development and, therefore, the address take over the markets.
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