Fed Chairman Jerome Powell made significant statements during his presentation to the House Financial Services Committee.
Impact of Tariffs on Inflation
Powell stated that he expects inflation to rise in the coming months due to tariffs. He noted that this effect could be either short-lived or long-lasting. "The FOMC's obligation is to keep long-term inflation expectations firmly anchored at 2% and to prevent a one-time increase in the price level from becoming a continuing inflation problem," he noted.
Fed's Stance on Interest Rate Cuts
Powell emphasized that the economy has ample room to cut interest rates if needed. He mentioned that current interest rates are high enough to start cuts, but the Fed is prepared to act if the impact of tariffs proves short-lived. "We think we will start to see the impact of tariffs on inflation in the summer months," he added.
Cryptocurrencies and Fed's Position
When asked about cryptocurrencies, Powell responded that the Fed cannot and will not request authorization to purchase cryptocurrencies. He also emphasized that banks can offer cryptocurrency services provided security is ensured. According to him, the dollar will continue to be the reserve currency for a long time.
Throughout his statements, Jerome Powell underscored the importance of controlling inflation and the existing limitations the Fed faces regarding cryptocurrencies, reflecting current trends in economic policy.
