In the past 24 hours, the price of Bitcoin (BTC) has experienced a significant drop, raising concerns among investors. This decline followed remarks from Fed member Christopher Hammack, increasing fears about potential statements from Fed Chair Jerome Powell.
Key Highlights from Powell's Speech
The Jackson Hole meeting began yesterday and continues today, with Powell's remarks now underway. In about 1.5 hours, Hammack is expected to provide further commentary on CNBC. Additionally, a statement from former President Trump is anticipated at 19:00, ensuring an active news cycle as the weekend approaches.
Market Reactions and Key Discussions
An ongoing update on key highlights from Powell's speech will be provided. He noted that changes in risk balance could necessitate policy adjustments. Weak labor supply has aligned with demand, signaling increased downsides for employment.
One primary issue discussed is the stability of inflation expectations, which Powell believes cannot be guaranteed. The impact of tariffs on consumer prices is becoming more evident and is likely to rise in the coming months. Powell emphasized that GDP growth has significantly slowed down, mirroring the deceleration in consumer spending.
Economic Analysis and Market Outlook
Recent data shows a 2.6% rise in 12-month PCE inflation as of July, with core inflation increasing by 2.9%. The influence of tariffs on consumer prices is expected to intensify; however, Powell considers this effect to be short-term and unlikely to create lasting inflation issues due to labor market risks.
Powell expressed concerns over the potential for tariffs to exert upward pressure on prices, acknowledging that stringent immigration policies have caused a sudden slowdown in labor force growth. The Fed aims to prevent one-time price hikes from turning into persistent inflation problems. The weakness in labor supply, aligned with demand, has significantly reduced the rate of job creation necessary to balance the unemployment rate. Market participants have priced in two Fed rate cuts by the end of the year.
In conclusion, Powell's comments have led to a notable drop in Bitcoin's price, while altcoins appear relatively resilient. Issues concerning inflation and changes in Fed policy remain critical for the market.
