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According to Bloomberg, Federal Reserve Chairman Jerome Powell
When Powell attended the confirmation hearing of the Senate Banking Committee on the 11th, he tried to reassure members of Congress and investors. He emphasized that the Federal Reserve can complete the suppression of inflation, which is at the highest level in 40 years, without harming the U.S. economy. tricky task.

During the two-and-a-half-hour confirmation hearing, Powell pointed out that the Fed is on the way to starting to raise interest rates from near zero and reduce the Fed's massive $8.8 trillion balance sheet. However, He described the moves as an effort to unwind the ultra-expansionary emergency policies implemented to fight the epidemic, rather than moving toward a restrictive stance aimed at cooling an overheating economy.

Powell noted: This year, we are really just moving in the direction of closer to normal policy, but there is still a long way to go from where we are now to normal. This really shouldn't have a negative impact on employment rates.

Powell also said at the hearing that most of the inflationary pressures currently experienced in the United States are expected to subside on their own as supply chain bottlenecks and labor shortages related to the epidemic ease.

Powell did not disclose a timetable for raising interest rates. However, he made it clear that the Fed will begin to gradually reduce its balance sheet this year, a move that will withdraw liquidity from the financial system and will do so at a faster rate than after the financial crisis.

According to Reuters, when asked about the Fed's decision on when and how quickly to raise interest rates and adjust the size of its balance sheet, Powell stressed that we must be humble but also flexible.

The Federal Reserve announced after its policy meeting last month that it would double its monthly bond purchases to US$30 billion starting in January this year, indicating that the easing policy may end early in March this year. The dot plot shows that the Fed is prepared to raise interest rates at least three times after completing the reduction of bond purchases.

**Cryptocurrency Report Will Be Released**

In addition, according to Coindesk, Powell also predicted at the hearing that the Federal Reserve’s report on cryptocurrencies and central bank digital currencies (CBDC) will be released within a few weeks. The report was originally scheduled to be released in September last year.

Referring to the delay in releasing the report, Powell explained: Because it is not quite to the extent that we need it, but it is actually there now and we will publish it in a few weeks.

The report is expected to focus on CBDC, a topic being studied by the Fed and a hot topic at the hearing. Republican Senator Pat
Toomey asked at the hearing whether CBDC would not be able to coexist with well-regulated, privately issued stablecoins if Congress authorized the Federal Reserve to launch a digital currency.

In response, Powell gave a clear answer: No, not at all.

**U.S. stocks and Bitcoin rebound across the board**

According to "Reuters", investors were relieved that Powell's congressional testimony contained no major surprises. The U.S. stock market rose on the 11th, led by the Nasdaq Composite Index, while the S&P 500 ended its five-day streak. of decline.

The Dow Jones Industrial Average rose 183.15 points, or 0.51%, to 36,252.02 points. The S&P 500 index rose 42.78 points, or 0.92%, to 4713.07 points, and the Nasdaq Composite Index rose 210.62 points, or 1.41%, to 15153.45 points.

Bitcoin (BTC) prices also recovered. According to Tradingview data, Bitcoin (BTC) began to rebound around 0:00 this morning, rising straight from around $41,700, once touching $43,100, and then falling back slightly. As of the time of writing, it was trading at $42,636, an increase of 1.6% in the past 24 hours.

Led by Bitcoin, the overall cryptocurrency market has also fully recovered. Coinmarketcap data shows that Ethereum (ETH) rose 4.56% to US$3,234, while mainstream currencies such as BNB, Solana (SOL), ADA, Ripple (XRP), etc. had a rise of 3% to 7%. increase in time.

Shawn, Senior Manager, Trader Strategy, TDAmeritrade, Chicago
Cruz told Reuters that Powell's comments are expected to reassure investors because they show the Fed will not prioritize lowering inflation over everything else, including employment.

Shawn
Cruz pointed out that the initial market concern was that the Federal Reserve would disrupt the pace of economic recovery, but investors could see from Powell’s congressional testimony on the 11th that he would not just suppress inflation without considering the impact on the economy. of other possible impacts.