The Federal Reserve is growing more and more alert to the risks of stagning, an awkward mixture of decelerated growth and growing inflation that could challenge political leaders.
While President Jerome Powell insisted that the economy is in “good form” and emphasized that the Central Bank is in “a good position to wait and see”, before changing the policy, the subtle changes in the Central Bank’s policy statement pointed to the main concerns about the direction of the economy.
With its stable reference interest rate today, the United States Central Bank recognized the growing risk of increasing inflation and unemployment, approximately the definition of stagflation, which for the last time appeared in a considerable part of the 1970s. That scenario would leave the central bank with limited space to maneuver to stimulate a weakening economy without feeding more inflation.
“The Fed is worried about stagflation,” said Zach Pandl, Chief of Research of Grayscale, in X after the decision. “We believe the result would be good for Bitcoin.”
In a previous report, Pandl argued that growing rates contribute to stagflation, which historically harms traditional assets but benefits the few value stores such as gold. “Bitcoin was not present for past stagnations,” he wrote, “but a little digital merchandise can be considered and is seen more and more as a modern value store.”
Bitcoin negotiated in a narrow range after the announcement of the Fed and Powell’s comments. Briefly touched $ 97,500 on Wednesday earlier in optimism around the US-China commercial conversations before recovering at $ 96,500, 1.6% in the last 24 hours.
The Coendesk 20 (CD20) index, a broader meter of the cryptography market, increased only 0.3% during the same period, weighed by 1% -3% in XRP, Avax, Uni, Near and AAVE.
Meanwhile, the actions were modestly recovered from previous losses, with S&P 500 and Nasdaq closing 0.4% and 0.3% higher, respectively.
