{"id":27837,"date":"2020-08-27T22:18:33","date_gmt":"2020-08-27T19:18:33","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=27837"},"modified":"2025-08-26T23:24:19","modified_gmt":"2025-08-26T20:24:19","slug":"bitcoin-falls-as-powell-signals-readiness-to-push-inflation-higher","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/bitcoin-falls-as-powell-signals-readiness-to-push-inflation-higher\/","title":{"rendered":"Bitcoin falls as Powell signals readiness to push inflation higher"},"content":{"rendered":"

Bitcoin fell more than 2% to $11,200 after the speech by the U.S. Federal Reserve Chair Jerome Powell. As CNBC<\/a> reported, he signaled the Fed’s readiness to let inflation run above the 2% target.<\/p>\n

The U.S. central bank formally shifted to a policy of average inflation targeting.<\/p>\n

Mr. Powell said that the “decisive” update would better support the labor market and the economy overall. In practice, this will mean a longer period of keeping the policy rate near zero.<\/p>\n

The speech moved markets. At the time of writing, Bitcoin traded around $11,200, down 2.4% from the previous day\u2019s close. The price of a Troy ounce of gold fell 1.2% to $1,930.<\/p>\n

\\\"Bitcoin<\/p>\n

BTC\/USD rate. BTC\/USD<\/a>. Source: TradingView.<\/p>\n<\/div>\n

Powell said that the neutral federal funds rate has declined significantly in recent years and will remain at this low level. This metric characterizes the level of the policy rate that neither restrains growth nor fuels inflation.<\/p>\n

Powell noted that, unlike the situation four decades ago when his predecessor Paul Volcker sharply tightened monetary policy, inflation does not pose a threat today. He attributes this to demographics and new technologies.<\/p>\n

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“Many consider it illogical that the Fed would want to push inflation higher. Yet its persistently low level over an extended period could also pose serious long-term risks to the economy,” Powell said.<\/p>\n<\/blockquote>\n

Powell and his colleagues say that the policy change will raise inflation expectations and create the conditions for inflation to rise to the 2% target.<\/p>\n

One of the founders of the U.S. exchange Gemini, Tyler Winklevoss, said after Powell’s remarks that the dollar is no longer a reliable store of value.<\/p>\n

\n

Powell\u2019s speech, in plain English:<\/p>\n

“There is too much debt in the US & globally. It\u2019s hurting growth. This can be resolved 1 of 2 ways:<\/p>\n

1) Widespread defaults (including on sovereign debt)
\n2) Inflate it away<\/p>\n

Today we are accelerating Option #2.” https:\/\/t.co\/otarcQeTLW<\/a><\/p>\n

\u2014 Luke Gromen (@LukeGromen) August 27, 2020<\/a><\/p>\n<\/blockquote>\n