Bitcoin (BTC) dipped below $26,000 for part of the day on Friday after U.S. Federal Reserve Chair Jerome Powell acknowledged the possibility that the Fed might have to hike interest rates again.
Powell spoke at a Fed-sponsored economic policy symposium in Jackson Hole, Wyoming on Friday morning.
He stated that it’s the “Fed’s job” to bring inflation down to the central bank’s target of 2%.
“We have tightened policy significantly over the past year. Although inflation has moved down from its peak – a welcome development – it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
Powell notes that personal consumption expenditures (PCE) inflation peaked at 7% in June 2022 and gradually declined to 3.3% as of July, which the Fed chair says is “roughly in line with global trends.”
Still, Powell says the significant decline in that PCE inflation metric isn’t necessarily telling the full story.
“Headline inflation is what households and businesses experience most directly, so this decline is very good news. But food and energy prices are influenced by global factors that remain volatile and can provide a misleading signal of where inflation is headed. In my remaining comments, I will focus on core PCE inflation, which omits the food and energy components.
On a 12-month basis, core PCE inflation peaked at 5.4% in February 2022 and declined gradually to 4.3% in July. The lower monthly readings for core inflation in June and July were welcome, but two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal.”
BTC has since jumped back above $26,000 and is trading at $26,078 at time of writing. The top-ranked crypto asset by market cap is down 0.39% in the past 24 hours.
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