Commentary: Fed Chair Jerome Powell Details Inflation Target Changes

Federal Reserve Chairman Jerome Powell explains the U.S. central bank’s economic approach, including how it will address its previous 2% inflation goal over the next decade.

CoinDesk First Mover Editor Bradley Keoun has already laid out the implications for the crypto space – you can read his article here.

Check this page for updates on commentary and analysis on the day’s events. Watch Powell’s comments here.

ND (10:00): Powell’s done for the day. The symposium will continue through tomorrow, with Bank of England Governor Andrew Bailey giving a speech Friday morning.

BK (10:00): Based on the muted market reaction after Powell’s comments, nothing he said was very far out of line with expectations – that the Fed is comfortable letting inflation rise above its 2% target over the next few years. But the Fed has left itself flexibility to change its monetary-policy plans in the future. And certainly Powell didn’t rule out any use of its monetary-policy tools, such as a broader expansion of its balance sheet to keep markets from tumbling if the economy worsens and bankruptcies increase. Entirely possible – and within the new framework – that the Fed could come out with more trillion-dollar money infusions the next time markets start to falter/lurch.

BK (9:52): Bitcoin’s price rally post-Powell speech has faded, now down to ~$11,400 from ~$11,600 earlier:

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ND (9:49): The banking system was “well-capitalized and highly liquid,” Powell says, addressing the pre-COVID-19 economy.

The point of the Fed’s efforts across the last six months was not to stimulate the economy but “provide a little bit of comfort” to individuals and businesses: “Our response was actually quite different from what it was in the financial crisis, so we could immediately cut rates to zero, we raised our asset purchases essentially without limit to support market function.”

The economy can recover – if the U.S. can keep the pandemic under control. The hard…

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