Bitcoin’s price went turbulent during a press conference following today’s highly anticipated Federal Open Markets Committee (FOMC) meeting. It fell $1000 as Federal Reserve Chairman Jerome Powell restated plans to raise the federal funds rate in March.
- In his speech preceding the conference, Powell recognized that much of the labor force is unable to report for work, given current circumstances. However, he expects the effects of the Omicron wave to be brief, alongside its negative economic effects.
- The chairman noted that inflation is well above the Federal Reserve’s target rate of 2%, blaming “supply and demand imbalances”. Earlier this month, December’s CPI came in at a record 7%, boosting Bitcoin’s price.
- Citing a “tight” labor market, Powell concluded that the economy no longer needs “sustained monetary policy support.”
- As such, plans to raise rates and lower the Fed’s balance sheet in March remain in effect.
- “The Fed will be moving away from a very highly accommodative policy to a substantially less accommodative policy, to a policy that’s not accommodative, in time,” said Powell.
- Earlier today, BitMEX co-founder Arthur Hayes surmised that the Federal Reserve is bluffing, and can’t actually raise rates without hurting the market. Powell disagreed, however, saying there is plenty of room to raise rates.
- Both the crypto and stock markets fell following the speech. Bitcoin has gone down from over $38,200 at 2:40 pm EST to below $37k at the time of writing.
- Meanwhile, both the NASDAQ and S&P 500 are down 0.5% on the day.