US Federal Reserve Chairman Jerome Powell reassured the public by taking a strong stance on fears of a looming economic recession, even as Bitcoin rises as a hedge.
Mr. Powell's confidence comes from analyzing current economic data and trends, and isolating political influences often clouds economic forecasts. This assertion was made in an atmosphere of skepticism about the role of monetary policy in ensuring long-term economic stability.
Recession is unlikely this year
Jerome Powell's declaration is consistent with his previous comments and emphasizes the Federal Reserve's commitment to data-based decision-making.
Core PCE, which excludes volatile costs of food and energy, rose 2.8% over the past 12 months. Meanwhile, the overall inflation rate was 2.5% compared to the previous year. Chairman Powell said this was in line with his own expectations and it was encouraging to see results that met his expectations.
Mr. Powell's optimism reflects a pragmatic view of the economy, acknowledging that the risk of a recession is low. He also downplayed the possibility of rate cuts until “the Federal Open Market Committee is confident that inflation is sustainably below 2%.”
“Growth is strong. As I said, the economy is strong. And there's no reason to think the economy is in or on the brink of a recession,” Powell said.
This perspective shifts the focus away from the short-term effects of monetary adjustments to the structural components of economic growth.
Read more: How to protect yourself from inflation using cryptocurrencies
Although Chairman Powell has insisted that a recession is unlikely this year, Bitcoin is benefiting from an uncertain fiscal and monetary environment.
Strategas Research Partners CEO Jason Trennert said this is due to recent regulatory advances and a growing desire for alternative currencies to traditional fiat currencies. The approval of Bitcoin ETFs and the simultaneous rise in gold prices reflect a collective hedge against a weakening US dollar.
“In the United States, there is no alignment between fiscal policy and monetary policy on inflation. And I think people are looking for a hedge against fiat currencies, especially the dollar. So that's why people have traditionally I think that's another reason why we're looking for an alternative to what was being considered,” Trennert explained.
Read more: Jerome Powell loses faith in America: Is Bitcoin the solution?
With Mr. Powell at the helm of finance with a steady hand, the debate over Bitcoin's viability as a safe-haven asset has intensified. As the United States faces a ballooning national debt and a reassessment of its debt terms looms, Bitcoin's role as a potential bulwark against financial instability is gaining attention.
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