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Powell Speech Today: US Federal Reserve Chair Jerome Powell said during his post Federal Open Market Committee (FOMC) press conference speech that serious difficulties in small number of banks have emerged. In response to these events, the Fed along with the FDIC took prompt actions, he said. In his opening remarks, the Fed chair said isolated banking problems if left unaddressed can threaten banking system. He added that all bank depositors’ savings are safe amid concerns of a growing banking crisis.
In response to these remarks, the Bitcoin price fell about 1% but the crypto market could take a different turn after the Fed chair’s comments are digested. It may be recalled that previous instances of Powell speeches saw a reversal in crypto market system after the press conference ended.
About SVB Collapse
Speaking about the Silicon Valley Bank (SVB) collapse, Powell said that fundamentally SVB management failed badly. The Fed supervisors saw the risks and intervened, he explained. He also admitted that there is so much uncertainty around the banking crisis.
Powell said in his speech that the Fed remains strongly committed to bringing down inflation to 2% and that the central bank will use all the tools needed. The Fed chair admitted that the process of getting inflation down has a long way to go and that it will be bumpy. He also acknowledged that the FOMC is aware that high inflation imposes significant hardship.
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Earlier, the US Fed’s Federal Open Market Committee (FOMC) delivered a 25 bps hike on expected lines. This hike took the current target rate from 450-475 bps to 475-500 bps. The central bank said recent indicators point to modest growth in spending and production. Regarding the ongoing banking crisis, the Fed said the U.S. banking system is sound and resilient. The crypto market reacted in a mixed manner to the decision.
The central bank panel said that the unemployment rate has remained low while inflation remained elevated. It warned of tighter credit conditions for households and businesses as a result.
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