US Fed speech: Powell extends warning on crypto industry and its ‘upheaval’

This was likely due to “unseasonal warm weather,” Powell said, adding that “if the totality of the data indicates there is a need for rapid tightening, we would be prepared to increase the pace of rate hikes.”

Powell laid out a series of concerns he has with crypto on Tuesday, and said that regulators overseas should be “extremely careful” when engaging with it. He said the central bank did not want to stifle innovation.

Bloomberg quoted Powell during a hearing before the Senate Banking Committee as saying, “We don’t want regulation like this to stifle innovation that just favors the incumbents and things like that,” but, every Like anybody, we’re watching what’s happening in the crypto space and what we see is tremendous turmoil, we see fraud, we see a lack of transparency, we see run risk.”

The announcement had an immediate impact on US stocks. Stocks fell on Wall Street on Tuesday after the head of the Federal Reserve warned it could sharply hike interest rates if inflationary pressures remain high.

The S&P 500 was lower 1.2% in afternoon trading. The Dow Jones Industrial Average fell 460 points, or 1.4%, to 32,970 as of 1:15 p.m. Eastern Time, while the Nasdaq Composite was lower 0.7%.

The Fed has already raised its benchmark lending rate eight times since the beginning of last year as it battles inflation that remains above its long-term target of 2%. The Fed’s preferred inflation measure, the personal consumption expenditure price index, hit an annual rate of 5.4% in January.

At the same time, the labor market remains “extremely tight,” Powell said.

“To restore price stability, we will need to see lower inflation in the sector, and some softening of labor market conditions,” he said.

US job growth unexpectedly rose in January, while unemployment fell to its lowest rate in more than five decades despite efforts to cool the economy.

While wage growth has slowed, analysts believe it is not yet enough for the Fed.

A strong labor market supports income and in turn demand.

Policymakers worry that increased wages could drive up inflation, complicating the battle to rein in prices.

Powell’s appearance on Tuesday comes shortly after the US central bank released its semiannual report on monetary policy, which pointed to a tight labor market, strong job gains, historically low unemployment and high nominal wage growth .

here is full speech,

Federal Reserve Chairman Jerome Powell has again warned US banks about the risks of getting involved in the digital-assets industry.

Powell laid out a series of concerns he has with crypto on Tuesday, and said that regulators overseas should be “extremely careful” when engaging with it. He said the central bank did not want to stifle innovation.

“We don’t want regulation to stifle innovation in a way that favors incumbents and things like that,” he said during a hearing before the Senate Banking Committee. The crypto space and what we see is quite a bit of turmoil, we see fraud, we see lack of transparency, we see run risk.”

European shares posted their biggest one-day decline in two weeks on Tuesday as investors weighed in on the prospect of a 50-basis point hike by the US Federal Reserve following hawkish remarks from Chair Jerome Powell.

The pan-European STOXX 600 index closed down 0.8%, led by sharp gains in real estate and technology stocks.

(with inputs from agencies)