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Fed Chair Jerome Powell Says Soft Landing Will Be ‘Challenge’, Call For Crypto Regulation

Federal Reserve Chairman Jerome Powell told Congress the US central bank must “go ahead” and keep raising interest rates to lower inflation, even if it means the economy faces with higher unemployment and recession potential.

The president of the US central bank was challenged by senators on Wednesday on issues including inflation and cryptocurrency regulation.

In testimony before the Senate Banking Committee on Wednesday, Powell said a soft landing “would be very difficult” and a recession “certainly a possibility.” Senator John Kennedy (R-La.) Calls Powell “the most powerful man” in the world right now.

We are not trying to provoke and don’t think we will need to incite a recession, but we do think it is essential that we restore price stability, really for the benefit of the labor market. movement, just like anything else,” he said.

Inflation remains at a four-decade high of 8.6% in May, a new high that surprised economists, traders and even Fed officials. Powell said the Fed will continue to raise interest rates until it sees clear signs that inflation is cooling.

Financial conditions have priced in additional rate hikes, but we need to go ahead and have those conditions in place,” he said.

The federal funds rate is currently in the range of 1.5%-1.75%, but revised forecasts by Fed officials last week showed rates expected to rise to 3.25% -3 .5% at the end of the year.

Three senators, including Senator Cynthia Lummis (R-Wyo.), Senator Kyrsten Sinema (D-Ariz.) and Senator Sherrod Brown (D-Ohio), challenged Powell with questions. on cryptocurrencies, specifically regulation, accounting for the digital handling of assets, and the current collapse in the crypto market.

“We’re watching those events very carefully, but the central bank “hasn’t really seen significant macroeconomic effects so far,” said Powell.

He also repeatedly emphasized that there is a need for a better regulatory framework for cryptocurrencies.

The same activity should have the same regulation no matter where it appears, and that is not the case at present as many digital financial products are, in some ways, quite similar to those already in existence. exist in the banking system or capital markets, but they are not regulated in the same way,” he said. “So we need to do it.

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