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Crypto Market News: US Federal Reserve Chairman Jerome Powell on Wednesday commented about the central bank’s approach to the monetary policy, in the context of traders anticipating an interest rate hike in the July meeting. The Fed Chair warned that there was strong possibility of two more rate hikes before the end of 2023. Meanwhile, Bitcoin price jumped slightly whereas the S&P 500 Index dropped in reaction to the comments. The Powell speech was made at a forum of central bank leaders.
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The central bank chief’s warnings on rate hikes come at a time when a vast majority of traders believe the July 26 meeting of the Federal Open Market Committee (FOMC) would deliver a rate hike. According to the CME FedWatch Tool, an overwhelming 81.8% of the respondents showed confidence of a rate hike.
Powell Speech: More Restriction Coming
The US Fed Chair participated in a monetary policy forum hosted by the European Central Bank (ECB), along with other global central bank leaders in Sintra, Portugal. The forum has ECB President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Japan Governor Kazuo Ueda in attendance. Powell explained that there was a strong majority among the Fed officials to go for two more rate hikes.
“We believe there is more restriction coming, driven by the labor market. There is a strong majority for two rate hikes in dot plot.”
Following the recent rate hike pauses, resumption of rate increases will add to the 10 back to back rate hikes which started in March 2022. The Fed officials have been voicing out the central bank’s aim to bring down inflation to the 2% target, for which traders expect monetary policy tightening continuing until late in 2024.
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