The US central bank is not really seeing significant macroeconomic implications from crypto’s volatility, says Jerome Powell Chairman Federal Reserve. Testifying before the Senate Committee on Banking, Housing and Urban Affairs on “The Semiannual Monetary Policy Report to Congress”, he said they are tracking crypto activities and their implications on the broader economic outlook very closely.
Powell said that so far, they are not really seeing significant macroeconomic implications. He emphasized the principal implication is really what they and others have been saying all along. The chairman acknowledged that it’s a very innovative new space, thus the need for a better regulatory framework. Powell believes the same activity should have the same regulation no matter where it appears, but that isn’t the case right now.
He had said in March that the existing regulatory frameworks were not built with a digital world in mind. Central bank digital currencies (CBDCs), stablecoins, and digital finance will need changes to existing laws. It also requires regulation, entirely new rules, and frameworks.
Powell told Congress on Wednesday that the central bank is determined to bring down inflation. He believes the Fed can make it happen. The Fed understands the hardship high inflation is causing. It’s especially committed to bringing inflation back down, and the Fed is moving expeditiously to do so.
In regards to the US economy, the chairman said the recession is not their intended outcome. But it’s a possibility. Powell said the events of the last few months around the world have made it more difficult to achieve what they want – 2% inflation and a strong labor market.