Powell Hearing | Rate Hike and Tapering Could Happen Sooner and Faster, But US Stocks and Cryptocurrencies Rebound across the Board

Jerome Powell, the Federal Reserve Chairman who has been nominated for reappointment, participated in a confirmation hearing where he faced questions from the Senate about the possibility of the most drastic tightening policy in decades by the Federal Reserve. Powell stated that no decisions have been made yet regarding reducing the balance sheet, but it will be done "sooner and faster."

At the same time, it was reported that the Collective Security Treaty Organization (CSTO) led by Russia has confirmed the withdrawal of troops from Kazakhstan within two days and has labeled the unrest as a "counterterrorism operation." However, it is still uncertain whether the shutdown mining pools have resumed operations.

Both the U.S. stock market and cryptocurrency market may have already been impacted last week. Tonight, they were largely unaffected by Powell's speech and instead saw an overall increase. The U.S. stock market opened lower as it awaited more policy information from Powell's Senate testimony. The Dow Jones Industrial Average fell by 225 points or 0.6%, while the Nasdaq Composite and S&P 500 both dropped by 0.5%, and the Philadelphia Semiconductor Index fell by 0.8%.

After Powell's speech, there was a reversal in the market with a general increase. The Dow Jones Index rose by 0.06%, the Nasdaq by 1.27%, and the S&P 500 by 0.5%. In the cryptocurrency market, Bitcoin rose above $43,000, and Ethereum rose back to $3,200.

Powell stated that the Fed's main policy tool is interest rates. If inflation persists longer than expected, the Fed will have to further raise interest rates, "but we may still be in a time of very low interest rates."

This year, the Fed will adopt policies closer to normalization and may even allow the balance sheet to shrink, with the earliest ending of asset purchases by the end of March. In his written testimony before the hearing, Powell said, "We will use tools to support the economy and a strong labor market, avoiding entrenched inflation."

During the hearing, Powell pointed out that inflation pressures may last until mid-2023 due to reduced hiring and growth stagnation caused by the Omicron virus. This should be a short-term phenomenon, and he believes that the economy will start to rebound in the second half of the year, successfully overcoming the challenges brought by the pandemic.

This article is authorized and reproduced from Horizon News Network.