Federal Reserve Chairman Jerome Powell delivered a much-anticipated speech in Jackson Hole, Wyoming, and struck a more dovish tone.
Powell said he was more confident about achieving the 2% inflation target and that it was time to ease monetary policy, adding that the timing and pace of rate cuts would depend on incoming data and the balance of risks.
Bitcoin price rose and surpassed $62,000 at the same time as Powell’s positive comments. However, BTC has now retreated and is trading at $61,500.
Bitcoin rallied during Powell’s speech, while the U.S. Dollar Index (DXY) fell below 101 for the first time since December.
what happened?
After years of near-zero interest rates, the Federal Reserve began a long-term rate hike cycle in early 2022, raising interest rates to 5.25%-5.50% in 2023.
The Fed has kept interest rates in this range for more than a year, waiting to cut rates once it becomes more confident that inflation will reach its 2% target.
Powell said it is time to ease monetary policy and he is more confident about achieving the 2% target.
The next question is how much the Fed will cut rates at its September meeting.
As the market continues to trend toward a 25 basis point rate cut, the probability of a 50 basis point cut has reached 32.5%, while the probability of a 25 basis point cut has reached 67.5%, according to CME FedWatch.
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