The Federal Reserve is pausing to assess its rate hike program, which so far has contributed to a banking crisis, rising household debt and market volatility. Opinion by danielgkuhn for The Node newsletter
Proving that economics is more an art than a science, Federal Reserve Chairman Jerome Powell said the central bank will"skip" a round of rising interest rates. This left market analysts to debate the meaning of the word.
This is an excerpt from The Node newsletter, a daily roundup of the most pivotal crypto news on CoinDesk and beyond. You can subscribe to get the full Despite the Fed’s decision to pull back on the most aggressive monetary policy strategy in the U.S. since the 1980s, stocks and crypto crumbled after the press conference. For many, Powell’s slip of the tongue all but guarantees the Fed will continue to raise interest rates this year, likely as early as July, in a bid to cool the economy.
For many, however, Powell has already gone wrong. It’s widely believed that the Fed’s financial engineering contributed to the collapse of three U.S. banks earlier this year – including the second-largest bank failure on record in the U.S. – by cratering the value of U.S. Treasury bonds. Backed by the full faith and credit of the U.S. government, Treasurys are considered the safest investment in the world. This banking distress could continue to weigh on the economy.
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