The price of Bitcoin and other cryptocurrencies rose on Friday after Federal Reserve Chairman Jerome Powell didn’t dismiss the prospect of a rate cut in Jackson Hole, Wyoming, on Friday.
Within 15 minutes of Powell’s speech starting, Bitcoin jumped to $114,700 from $112,000, while Ethereum surged to $4,600 from $4,300, according to crypto data provider CoinGecko. Both cryptocurrencies remained down 2.9% and 1.4%, respectively, over the past week.
Powell was steadfast in his assessment that the central bank faces elevated inflation risks compared to the labor market, but he said that the central bank is prepared to adjust its policy stance if its dual mandate of full employment and stable prices is in conflict.
Caveating that the central bank is not on any preset course, Powell said “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” indicating that the central bank may lower interest rates at its September meeting.
Still, Powell warned that inflation from U.S President Donald Trump’s tariffs has not been fully reflected in economic data, and it could be that way for months.
“It will continue to take more time for tariff increases to work their way through supply chains and distribution networks,” he said. “Come what may, we will not allow a one time increase in the price level to become an ongoing inflation problem.”
Analysts say that Bitcoin and other cryptocurrencies were falling earlier this week in anticipation of Powell’s eighth and final speech in Jackson Hole as Fed chair. With markets positioned for easing in September, they said “cautiously hawkish” remarks could disappoint investors.
Bitwise Senior Investment Strategist Juan Leon told Decrypt on Thursday that he expected Powell to focus on sticky inflation and tariff uncertainty, while avoiding any pre-commitment to a rate cut in September and potentially pressuring risk-on assets with a firmer tone.
Powell looked back on the COVID-19 pandemic in defending his tenure as Fed chair. The central bank took drastic measures to stabilize markets and stimulate growth as the U.S. economy ground to a halt nearly overnight. And as a red-hot economy roared back from pandemic-related pressures, inflation peaked at a four-decade high of 9.1% in June 2022.
