During a hearing before the House Financial Services Committee, Federal Reserve Chair Jerome Powell discussed cryptocurrency regulation and the current economic conditions. He assured that the central bank is not inhibiting banks from engaging with crypto companies.
Regulation and Cryptocurrency
Powell acknowledged being troubled by reports of banks cutting ties with crypto companies. He suggested banks might be wary of risks tied to money-laundering rules. Powell also noted changes within the Fed, removing previous policies requiring higher scrutiny on banks involved with controversial sectors.
Inflation and Interest Rates
Powell indicated that while inflation has been reduced to 2.6% over the last year, high interest rates are necessary. Recent data showed an increase in core inflation, especially in sectors like housing and food. While the Fed had decreased borrowing costs, Powell emphasized the lack of urgency in adjusting interest policies, prompting market reactions with falling stocks and rising treasury yields.
Political Issues and the Future
Shortly before Powell's remarks, Donald Trump called for lower interest rates; however, Powell declined to comment on the president’s words, emphasizing that Fed decisions are based on economic data. He noted that tariffs and trade policies could influence economic growth and inflation. Discussions also touched on stablecoins and central bank digital currency, with Powell stressing the importance of appropriate regulation.
The committee hearing provided an opportunity to discuss key issues around cryptocurrency regulation and economic policy. Jerome Powell confirmed the Fed's active engagement in internal changes and continuous monitoring of financial markets and the economy as a whole.
