Federal Reserve Chairman Jerome Powell has said and the crypto markets have reacted. The US central bank has begun to take steps to keep costs equal as inflation rises.
On December 15, the head of the Federal Reserve (Fed), Jerome Powell, said that "with inflation so high, we have to formulate policies in real time."
US inflation rates are currently the highest in 4 decades at 6.8%, while the Fed's purpose is just 2%.
To combat this rampant inflation, the central bank said it plans to minimize its bond purchase program faster than originally projected. This will clear the way for at least 3 interest rate hikes in 2022.
La Reserva Federal y el dólar
Massive money printing and rampant inflation will ultimately devalue the dollar.
Earlier this week, Citibank CIO David Bailin predicted that a dollar could be worth between 80 and 85 cents over the next decade.
Gradual reduction of Fed bond purchases
Higher interest rates (currently standing at 0.25%) could hurt jobs if mortgages and car loans increase.
Powell acknowledged this comment by noting: "We still do not have a deep recovery of collaboration in the union force, and it is feasible that we will not have it for any time", before adding "at the same time, we have to make a policy now and the inflation is well above the target, "
The central bank will also stop adding to its reserve of nearly $ 8.2 trillion in Treasuries and mortgage-backed securities around March. This “downsizing” of bond buying, which began in March 2020, occurred 3 months before the initial plans.
According to CNBC, Tom Lee of Fundstrat said:
"Creo que la curita se está desprendiendo. El mercado ha estado esperando esto. El rumor se estaba vendiendo y es hora de comercializar el evento".
Markets have generally been positive on the news, as it is a sign that the stimulus packages induced by the pandemic disease continue to gradually come to an end.
El criptomercado sube
The cryptocurrency market was buoyed by the news with total market capitalization growth of $ 140 billion or around 6% in the last 12 hours.