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US Federal Reserve Chairman Jerome Powell announced the agency's new targets and future macroeconomic factors that will be unfavorable for the growth of the cryptocurrency industry.
According to the results of the first half of the year, the data of the consumer price index in the US increased year on year by 8.5%. Inflationary processes and an increase in household spending on personal consumption had a positive impact on the cryptocurrency market, causing a temporary upward rally. The two flagship assets of the crypto industry – bitcoin and ether – rose by 4% and 5%, respectively.
However, just an hour after Jerome Powell's speech began, the price of BTC fell by 1.83% and ETH by 1.80%. At the time of publication of the article, BTC is trading at $21 215, and ETH is trading at $1 506. The fall provoked Powell's statement about future macroeconomic factors that will become unfavorable for the cryptocurrency industry.
Powell began his speech by saying that the agency will focus on bringing inflation back to its 2% target. He stressed the importance of price stability for the economy and the Fed's responsibility for it. Higher interest rates, slow growth and soft labor market conditions will reduce inflation, Powell said, although there will be some damage to households and businesses.
“Restoring price stability will take some time and will require active use of our tools to balance supply and demand. A sustained period of below-trend growth is likely to be needed to bring inflation down. There will be some unfortunate costs associated with this, but failure to restore price stability entails much greater losses,” Powell said.
Earlier, the former chairman of the US Securities and Exchange Commission (SEC) Jay Clayton admitted that unanimity on the regulation of cryptocurrencies in the US seems elusive. He expressed the opinion that the government first needs to study new technologies, use them, and only then introduce any restrictions.
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