In Brief
- Inflation is currently higher than expected, a tendency that will probably continue for the coming months confirmed Powell.
- Powell expects Covid-19 to have less implications on the state of the economy with time.
- Covid-19 mortality rates have plummeted across the globe as Government measures come under scrutiny.
During the highly-expected Federal Reserve meeting on Wednesday Afternoon, Chair Jerome Powell confirmed that inflation was set to continue for the dollar, perhaps even more than previously expected.
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Inflation to continue
In the latest Federal Reserve meeting, Federal Reserve Chair Jerome Powell confirmed his expectations of persistent inflation which would be higher than expected. However, the Fed still expects that it will be able to curb that figure back to the 2% objective.
Last year, the Federal Reserve moved the goal-posts for inflation, allowing inflation to run hotter than usual, allegedly to support the labour market. The move was a notable departure from the previous method of adjusting targets, which was not an average adjustment as was more dependent on the underlying economic conditions.
Powell said:
Inflation is running well above our 2% objective, and has been for a few months, and is expected to run certainly above our objective for a few months before we believe it’ll move back down toward our objective. The question of whether we’ve met that objective, formally, is really one for the committee to make.
The news came just as Bitcoin was hovering above $40,000, with the market experiencing a bout of bullishness over the last 8 days.
Notably, higher inflation figures are seen as a catalyst for bitcoin’s price, mostly due to the asset’s status and fundamentally scarce design as an inflationary hedge. In addition, the USD dilution reduces the most widely-used denominator compared to Bitcoin.
While Powell recognizes that inflation is currently above the Fed’s prediction – running at its highest rate since the 2008 financial meltdown – that isn’t enough to cause a change in the US monetary policy. This confirms the US’ commitment to inadvertently devaluing the currency despite warning signs.
Covid-19 to Have Less Economic impact
Answering those who believe (contrary to current data sets) the Delta variant of Covid could have a similar effect on the economy than the first wave in March 2020, Powell answered:
With successive waves of Covid over the past year and some months now, there has tended to be…less in the way of economic implications from each wave, and we will see whether that is the case with the Delta variety.
Covid-19 mortality figures have plummeted dramatically all over the world as questions regarding lockdown efficacy, PCR testing efficacy and Government overreach surface across the free world.
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