Victor Ugochukwu · Dec 14, 2020 . 5min read
U.S. Federal Reserve maintains benchmark interest rates
Jerome Powell says the U.S. Fed will maintain current benchmark interest rate; however, this is due to sparking fears of increasing consumer prices and inflation.
By Victor Ugochukwu · Nov 6, 2020 . 5min read
The U.S. Federal Reserve which is in charge of the current monetary policy in the United States has come out to say that it is maintaining the current benchmark in interest rates perhaps the fuel for further bitcoin rise to hedge against impending inflation. This in light of current U.S. economic recovery, which is beginning to lose steam. Already, there’s likely an imminent second wave of the coronavirus about to hit the world’s largest economy.
Jerome Powell, Fed chair after a two days meeting held a press meeting where he said
“We’ve gotten through the first five, six months of the expansion better than expected … But we have to be humble where we are relative to this disease. It has not gone away.”
Although Jerome Powell didn’t directly mention the U.S. Elections as part of what is propping its decision, he said
“A full economic recovery is unlikely until people are confident that it’s safe to reengage in a broad range of activities,”
Although interest rate remains stable, the Federal Reserve’s chair states that the future looks bleak, a call for more Bitcoin stockpiling.
Without a full economic recovery in sight as projected by the U.S. Federal Reserve, people and most importantly, institutions will look for a hedge; Bitcoin aptly comes to mind.
Recall that the Fed doubly expanded its balance sheet this year to $7.1 trillion. It started with about $3 trillion at the beginning of the year. And with a wild run of the coronavirus and hurting the economy, hence the need for more spending. However, this has sparked fears of future inflation.
This is arguably led to the rise of investor demand for bitcoin. Grayscale, Fidelity and several other hedge funds have been amassing their reserves in Bitcoin. Most likely in anticipation against rising consumer prices and a weakening dollar.
Bitcoin, on the other hand after hovering around the $10K mark broke that resistance to hit and close above $15K for the first time in 2 years.
Follow Cryptodose for daily updates.