On February 11, 2025, Federal Reserve Chairman Jerome Powell reiterated the core goals of monetary policy at a Senate hearing: maximum employment and price stability with a 2% inflation target.
Key Points from Powell's Report
Powell stated that the Fed is focused on achieving its dual mandate. The U.S. economy is performing strongly, with significant progress toward these goals over the past two years. The unemployment rate in January was 4%, and the average monthly job growth was 189,000, while inflation decreased to 2.8% but remained above the 2% target.
Impact on the Crypto Market
Powell's report provides insights into the future direction of the crypto market. If the Fed delays rate cuts due to persistent inflation, risk assets like meme coins and DeFi protocols could be impacted, but Bitcoin might benefit as an inflation hedge asset. Two more rate cuts are expected in 2025, potentially lowering financing costs in the crypto market, benefiting Layer2 scaling projects and RWA tokenization initiatives.
Macro-Economic Indicators and Crypto Market Dynamics
The U.S. GDP growth is expected at 2.5%, supported by consumer spending. However, business investments declined by 1.2% in Q4, signaling caution. U.S. Treasuries tokenization reached $72 billion, providing cash management alternatives for institutional investors.
The Fed's report indicates a path of gradual easing within the traditional financial system, while the crypto market is building a parallel financial system. This intersection creates arbitrage opportunities and systemic risks.
