Key Takeaways
- Inflation is currently higher than the Federal Reserve expected, a tendency that will likely continue for the coming months confirmed Powell.
- The market hasn’t reacted strongly to the news as Bitcoin continues to hover around $40,000.
- Powell expect the Delta variant to have lower implications on the state of the economy than previous waves.
During the highly-expected Federal Reserve meeting on Wednesday Afternoon, Chair Jerome Powell confirmed that inflation was set to continue for the dollar, perhaps even more than previously expected.
Inflation Set to Continue
Good news for the crypto markets came out of the latest Federal Reserve meeting as Federal Reserve Chair Jerome Powell confirmed that inflation could turn out the be higher and more persistent than expected. However, the Fed still expects to be able to curb that number back down to their 2% objective.
“Inflation is running well above our 2% objective, and has been for a few months, and is expected to run certainly above our objective for a few months before we believe it’ll move back down toward our objective. The question of whether we’ve met that objective, formally, is really one for the committee to make,” Powell said.
As the crypto market expected the news, Bitcoin hasn’t had a clear reaction to these recent announcements. Bitcoin is still hovering around $40,000 as the market confirms its recent bullish tendency.
Higher inflation is an upward catalyst for the price of Bitcoin due to the crypto asset’s status as a hedge against such inflation. In addition, the dilution of the dollar reduces the most widely-used denominator often compared to Bitcoin.
Nevertheless, investors were particularly wary of potentially bad news in the Fed meeting that could derail Bitcoin’s current upward trajectory. While Powell recognizes that inflation is currently above the Fed’s prediction, that isn’t enough to cause a change in the US monetary policy as of yet.
Answering those who believe the Delta variant of Covid will have a similar effect on the economy than the first wave in March 2020, Powell answered:
“With successive waves of Covid over the past year and some months now, there has tended to be…less in the way of economic implications from each wave, and we will see whether that is the case with the Delta variety.”
Disclaimer: The author held ETH at the time of writing.
