US Debt Burden Grows, says Fed’s Powell

Federal Reserve Chair Jerome Powell has raised concerns about the United States’ growing debt, stating that it is on an unsustainable fiscal path. Speaking in an interview, Powell emphasized the urgent need for elected officials to have a serious discussion on reducing the country’s level of debt. He explained that the current situation indicates that the debt is increasing at a faster rate than the broader economy is growing.

The price of Bitcoin experienced a setback after the Federal Reserve announced that it would not be cutting interest rates in March, citing the need for greater confidence in taming inflationary pressures before making any adjustments. Powell reiterated this stance, mentioning that the central bank requires substantial evidence of economic strength before considering rate cuts. While he believed that rate cuts were likely to occur later in the year, the committee did not anticipate reaching that level of confidence in time for the March meeting.

Rate cuts are generally seen as favorable for risk assets like cryptocurrencies and growth-oriented technology companies such as Apple and Nvidia. The reduction in interest rates makes borrowing cheaper, leading to increased spending and risk appetite in the wider economy. Powell acknowledged the importance of gaining more confidence before taking the significant step of implementing rate cuts.

Powell anticipated a decline in inflation during the first half of the year and mentioned that the central bank would reassess its strategy at the next Federal Open Market Committee meeting in March. He stated that if there were any signs of weakness in the labor market or if inflation significantly reduced, it may prompt an earlier adjustment in interest rates.

Powell’s remarks reflect concerns about the United States’ fiscal situation and highlight the need for a serious discussion on reducing debt. The Federal Reserve’s decision not to cut interest rates immediately had a negative impact on Bitcoin’s price. Powell expressed optimism that the central bank would revisit its strategy in March and make adjustments based on economic conditions.