Chair Jerome Powell of the U.S. Federal Reserve (the Fed) confirmed the central bank’s readiness to continue raising the policy rate if necessary.
Speaking at the annual symposium of the FRB Kansas City in Jackson Hole, the official noted that the inflation target remains at 2%. Despite positive momentum in recent months, progress toward the target is proceeding more slowly than planned.
“The Fed will act cautiously, deciding whether to resume raising rates or keeping them at the current level,” Powell said.
Against the backdrop of the Fed chair’s remarks, Bitcoin trading volume surged sharply. The cryptocurrency’s price reacted with short-term volatility. Prices fell to below $25,900. By the time of writing, the price of the digital asset had recovered to around $26,000.
Earlier, Grayscale Investments’ managing director of research Zak Pandl linked Bitcoin’s prospects to a ‘soft landing’ for the US economy. According to the expert, a scenario of sustainable growth in GDP and low inflation would help risk assets, including cryptocurrencies.
However, Powell said that above-trend economic growth would justify a rate hike.
The decision on the policy rate will be taken on September 20. According to CME FedWatch data, about 20% of market participants expect a rate hike to the 5.5%-5.75% range. The Fed’s previous level was set in July.
In mid-August, Bitcoin’s price reacted negatively to the publication of the Fed’s meeting minutes. The regulator signalled further tightening of policy.