In a recent meeting, Federal Reserve Chair Jerome Powell discussed inflation risks and the regulatory stance towards cryptocurrencies.
Inflation Risks
Powell noted that inflation could be a temporary outcome of a one-time shift in price levels or become more persistent. "It is also possible that the inflationary effects could instead be more persistent," he stated, reflecting the Fed’s dual awareness of both short-term volatility and longer-term risks.
No Rush to Cut Rates
Speaking on rate cuts, Powell emphasized that they would only resume "when the time is right." This reinforces the Fed’s wait-and-see approach as it monitors data, especially in light of recent tariff-driven price pressures, which he acknowledged could intensify starting in June.
Openness to Cryptocurrencies
In a notable inclusion, Powell stated that banks are permitted to engage in crypto-related activities, signaling a level of openness from regulators toward the evolving financial landscape. This aligns with broader trends of institutional engagement in digital assets.
The Fed chair’s comments highlight a delicate balancing act: managing inflation expectations, supporting growth, and adapting to emerging financial technologies like cryptocurrency. With no immediate action planned, markets are expected to remain focused on upcoming inflation and labor data.
